Home Headlines Detroit: Largest Bankruptcy Trial in U.S. History Ends

Detroit: Largest Bankruptcy Trial in U.S. History Ends

Detroit is America’s largest majority Black city

AFRICANGLOBE – Federal Judge Stephen Rhodes heard closing arguments in the largest municipal bankruptcy trial in United States history on November 8. The City of Detroit being unjustly represented by the law firm of the imposed emergency manager Kevyn Orr, Jones Day, attempted to make a case for forcing the majority African American municipality into insolvency where pensioners may get as little as sixteen cents on the dollar.

During the course of the preliminary hearings in federal court, over 23,000 retirees received letters from Orr’s office saying that their healthcare plans would be terminated by the end of this year. Subsequent announcements indicate that the deadline has been extended to the end of February 2014.

The judge will issue a ruling on whether the city is insolvent and whether the state-imposed emergency manager conducted “good faith” negotiations with the unions and other creditors prior to filing for bankruptcy. Attorneys for the unions say that the actions of Orr and his team has been shrouded in secrecy and that a decision was already made prior to any efforts to discuss these issues with the labor leaders and pensioners.

According to Sharon Levine, the attorney representing the American Federation of State, County and Municipal Employees (AFSCME) in the bankruptcy trial, “You don’t know how or what is going to be cut. How could you make a counterproposal without the very basic, simple facts?” (NYT, November 8)

Additional hearings will be held on the emergency management plans to pay off a swap deal with Bank of America and United Bank of Switzerland (UBS) which, if given the go ahead, will drive the city further into financial ruin. The Detroit City Council, where a majority of members have voted consistently with the banks, unanimously rejected the swap deal on October 21 that would be refinanced by Barclays, later sending a resolution to the bankruptcy court explaining why the arrangement was no good for Detroit workers, retirees and taxpayers.

Other efforts by the Detroit City Council to renew calls for intervention in the bankruptcy proceeding by the Security and Exchange Commission (SEC) are also underway. Earlier during the summer several members of the Stop the Theft of Our Pensions Committee (STOP-C) wrote a letter to the SEC pointing out the citations, lawsuits and ongoing criminal investigations leveled against numerous financial institutions that are involved in the destruction of Detroit.

These entities were major holders of fraudulent mortgage notes and municipal loans which have driven the city into unsustainable debt. At present Orr’s office is claiming that Detroit owes up to $22 billion divided into what they describe as both secured and unsecured creditors.

The objective of the Barclays swap deal was to pay off the banks prior to a decision on the eligibility of the Chapter 9 bankruptcy filing. Yet no offer has been made or accepted in relationship to the obligations owed to pensioners and employees.

This plan to pay off the banks first would be guaranteed through casino and income tax revenues. Any city asset worth more than $10 million dollars would also be put up as collateral for the deal, a proposal which has offended even more moderate elements on the Detroit City Council.

The Struggle Continues

What you are seeing in Detroit is the mass removal of the Black population

On November 12 a demonstration in front of the Bank of America headquarters in the financial district downtown once again placed blamed on the banks for the current city crisis. A united front representing the Moratorium NOW! Coalition, Detroiters Resisting Emergency Management (DREM) and the National Action Network (NAN) called for the protest.

The aim of the demonstration was to demand that the bankruptcy court reject the swap deal with Barclays, the threatened cuts to pensions and healthcare programs and for the maintenance of city jobs and public assets. These organizations have held demonstrations for months against the imposition of emergency management and the illegal bankruptcy filing carried out by Governor Rick Snyder who appointed Orr, both of whom are working diligently on behalf of the banks and corporations.

Whether the bankruptcy is allowed to go forward or not, the attacks on workers, retirees and city residents will continue. Efforts are well underway to further privatize city services and assets.

A Public Lighting Authority has already been established at the state level to take control of the much neglected system from city control. Due to the disinvestment by the federal and state governments from the city, no real infrastructural improvements have been conducted in decades.

The public transportation system is in shambles. The Detroit Public Schools Board of Education has been taken over by the State of Michigan with the appointment of three emergency managers since 2009.

Firefighting stations and personnel have been cut to the bare minimum while emergency medical technicians are so short of staff that it sometimes takes up to forty-five minutes to respond to calls. Street crime has skyrocketed and the focus on this aspect of the city crisis by the corporate media is prompting calls for greater security measures.

Firefighters have held several demonstrations against proposed cuts to their pensions and benefits. At demonstrations outside the federal courthouse, firefighters, city workers (both active and retired) have marched alongside community activists and leftists chanting “Hands Off Our Pensions, Make the Banks Pay!”

Part Two

Exit mobile version