Trial to examine if Detroit eligible in bankruptcy
An unusual trial starts Wednesday, pitting Detroit's emergency manager and his legal team against unions and pension funds that claim the city isn't qualified to scrub its books clean under Chapter 9 bankruptcy.
A city isn't eligible for a bankruptcy makeover unless it shows that key steps were met, especially good-faith talks with creditors earlier this year. A bankruptcy expert says it's "virtually impossible" to argue that Detroit is solvent.
Unions and pension funds claim emergency manager Kevyn Orr, who acquired nearly unfettered control over city finances following his appointment by Michigan Gov. Rick Snyder, was not genuinely interested in negotiating when they met with his team in June and July.
It's a critical decision for Judge Steven Rhodes: If Detroit clears the hurdle, the case then would quickly turn to how to solve at least $18 billion in debt and get city government off the ropes.
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