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Detroit Bankruptcy?

Detroit Bankruptcy?

Old Jul 19th 2013, 10:14 pm
  #16  
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Default Re: Detroit Bankruptcy?

Originally Posted by sir_eccles View Post
The whole internet is making Robocop jokes right now.

This message brought to you by OCP.
I'm surprised they went to Canada to shoot the remake - could have gone back to Detroit where they wouldn't need to waste money designing a set and it would have looked incredibly authentic - perhaps getting an Oscar for Best Production Design ....
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Old Jul 20th 2013, 3:55 am
  #17  
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Default Re: Detroit Bankruptcy?

Originally Posted by Jsmth321 View Post
Detroit has something like 18-20 billion dollars in debt, and just around 700,000 residents. I don't think there is any other possibility for them but to file bankruptcy.

Detroit is not a healthy city in any way shape of form.

Median income in Detroit just keeps dropping, its down to somewhere around 25,000 now, about half the national average.

18% in the city are unemployed.

Median value for an owner occupied home 50,000, in 2007 it was 88,000 and keeps on falling.

35.5% of families live at or below poverty.

57% of children in live in poverty.

Only 13% of residents over 25 hold a bachelors degree , compared to 28% nationwide.

The article is from Sept. 2012, so things may have gotten worse since then.

http://www.mlive.com/news/detroit/in...median_in.html
They need to shrink down to a sustainable level, bulldoze some sizeable areas and then reboot with some sort of technology or biotech park/hub and nearby some suitable housing - condos, townhomes, some good quality apartments, and some executive quality housing. With the right plan and the right backers they could make that work and rebuild the city.
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Old Jul 20th 2013, 4:08 am
  #18  
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Default Re: Detroit Bankruptcy?

A judge in Detroit has ruled the bankruptcy application as a violation of the constitution so this will make things a bit tougher. http://www.bbc.co.uk/news/world-us-canada-23381456 They are pretty much stuck unless they are successful with their appeal.
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Old Jul 20th 2013, 4:15 am
  #19  
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Default Re: Detroit Bankruptcy?

Originally Posted by Tegwyn View Post
A judge in Detroit has ruled the bankruptcy application as a violation of the constitution so this will make things a bit tougher. http://www.bbc.co.uk/news/world-us-canada-23381456 They are pretty much stuck unless they are successful with their appeal.
That's just asinine. If Detroit isn't allowed to go bankrupt in a controlled and organized manner, it is just going to run out of money, then nobody will get anything. Someone needs to tell the onions that money doesn't grow on trees and there simply isn't enough to go round. Chopping salaries and pensions isn't "fair", but where do they suppose the money Detroit needs to carry on in the way it has, is going to come from?
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Old Jul 20th 2013, 4:36 am
  #20  
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Default Re: Detroit Bankruptcy?

Originally Posted by Pulaski View Post
That's just asinine. If Detroit isn't allowed to go bankrupt in a controlled and organized manner, it is just going to run out of money, then nobody will get anything. Someone needs to tell the onions that money doesn't grow on trees and there simply isn't enough to go round. Chopping salaries and pensions isn't "fair", but where do they suppose the money Detroit needs to carry on in the way it has, is going to come from?
Bernanke..A little QE
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Old Jul 20th 2013, 4:41 am
  #21  
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Default Re: Detroit Bankruptcy?

Originally Posted by Beaverstate View Post
Bernanke..A little QE
Detroit has been quantitatively easing itself for the past 60 years! .... It is a lesson for all of us, if you rely on borrowed money, eventually you WILL run out of credit.
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Old Jul 20th 2013, 2:58 pm
  #22  
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Default Re: Detroit Bankruptcy?

Originally Posted by Tegwyn View Post
A judge in Detroit has ruled the bankruptcy application as a violation of the constitution so this will make things a bit tougher. http://www.bbc.co.uk/news/world-us-canada-23381456 They are pretty much stuck unless they are successful with their appeal.
The BBC omitted an important detail from the story.

The ruling was made by a county circuit court judge. But bankruptcy in the United States is a federal matter.

Federal law prevails over state law for a matter such as this. A bankruptcy judge has no obligation to consider the Michigan state constitution or other state laws. If anything, the judge may very well be compelled to not follow what just happened in the Michigan state court, since creditor priority has to be considered in deciding bankruptcy cases.
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Old Jul 20th 2013, 3:27 pm
  #23  
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Default Re: Detroit Bankruptcy?

Originally Posted by RoadWarriorFromLP View Post
The BBC omitted an important detail from the story.

The ruling was made by a county circuit court judge. But bankruptcy in the United States is a federal matter.

Federal law prevails over state law for a matter such as this. A bankruptcy judge has no obligation to consider the Michigan state constitution or other state laws. .....
If that is the case, why has Detroit appealed the ruling? (I'm not disagreeing with you, I am just interested to know why.)
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Old Jul 20th 2013, 3:59 pm
  #24  
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Default Re: Detroit Bankruptcy?

Originally Posted by Pulaski View Post
If that is the case, why has Detroit appealed the ruling? (I'm not disagreeing with you, I am just interested to know why.)
It certainly can't hurt to have a state appeals court toss out the lower court ruling, even if it isn't really binding on the federal court. I don't see why the state attorney wouldn't have appealed it, and the judge expected it to be appealed, given what she said in court.

There are also political issues at work here. On the one hand, the state government has thrown its hat into the ring with this, and needs to make sure that the case keeps moving forward; the judge's decision adds drama to the whole affair.

On the other hand, the judge may be doing a bit of grandstanding herself. She issued instructions that her decision be sent to Obama and that he should look into the pension issue, a move that was a bit out of left field. Circuit court judges in Michigan are elected, and this judge is up for reelection next year -- she probably expects that this decision will play well with the votes in her district, even if it is overturned.
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Old Jul 20th 2013, 4:26 pm
  #25  
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Default Re: Detroit Bankruptcy?

The idea of a city of a bankrupt is something I struggle to get my head around. Is it even possible in the UK?

EDIT: Apparently so: http://www.publicservice.co.uk/featu...y.asp?id=16128

Last edited by civilservant; Jul 20th 2013 at 4:28 pm.
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Old Jul 20th 2013, 4:35 pm
  #26  
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Default Re: Detroit Bankruptcy?

Originally Posted by RoadWarriorFromLP View Post
The BBC omitted an important detail from the story.

The ruling was made by a county circuit court judge. But bankruptcy in the United States is a federal matter.

Federal law prevails over state law for a matter such as this. A bankruptcy judge has no obligation to consider the Michigan state constitution or other state laws. If anything, the judge may very well be compelled to not follow what just happened in the Michigan state court, since creditor priority has to be considered in deciding bankruptcy cases.
Although there are federal bankruptcy laws that affect the states to write bankruptcy laws, bankruptcy laws are primarily written by the states. Unless there are specific federal bankruptcy laws that prohibit the states from enacting their own bankruptcy laws, the states bankruptcy laws are the laws that are followed. As an example, Florida law gives unlimited protection on a primary residence (expect from the mortgage lender and taxing authorities) during bankruptcy and all states define what can be protected and the amount that can be protected from creditors. In fact, Florida even allows a person to sell his/her home during bankruptcy and purchase a new home with the proceeds and that money can't be touched by creditors as long as the intention is to purchase a new home with the proceeds. Therefore unless federal law specifically states that pensions are protected or not protected during bankruptcy, states can write laws defining whether pensions are protected or not.

Last edited by Michael; Jul 20th 2013 at 4:50 pm.
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Old Jul 21st 2013, 12:14 am
  #27  
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Default Re: Detroit Bankruptcy?

Interesting Michael, so in essence if there are laws in Michigan that protect those pension plans, Detroit may not be able to get around it? I 'm sure there are many cities around the country watching this very carefully to determine if this is the only road they can take to shake off the burden of these payments. Although I appreciate the burden the state is facing, still tough for those that are dependant on their pensions.
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Old Jul 21st 2013, 12:32 am
  #28  
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Default Re: Detroit Bankruptcy?

The pensions will probably be treated as unsecured creditors, which gives them a lower status than secured creditors. They'll be at the back of the line, with every other unsecured creditor. They aren't the equivalent of a homestead.
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Old Jul 21st 2013, 2:13 am
  #29  
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Default Re: Detroit Bankruptcy?

Originally Posted by RoadWarriorFromLP View Post
The pensions will probably be treated as unsecured creditors, which gives them a lower status than secured creditors. They'll be at the back of the line, with every other unsecured creditor. They aren't the equivalent of a homestead.
I think you're right, because if the pensioners were protected they wouldn't now be kicking up such a stink about the bankruptcy filing.
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Old Jul 21st 2013, 2:45 am
  #30  
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Default Re: Detroit Bankruptcy?

Originally Posted by Tegwyn View Post
Interesting Michael, so in essence if there are laws in Michigan that protect those pension plans, Detroit may not be able to get around it? I 'm sure there are many cities around the country watching this very carefully to determine if this is the only road they can take to shake off the burden of these payments. Although I appreciate the burden the state is facing, still tough for those that are dependant on their pensions.
We won't know until the appeals have gone through the court system.

Originally Posted by RoadWarriorFromLP View Post
The pensions will probably be treated as unsecured creditors, which gives them a lower status than secured creditors. They'll be at the back of the line, with every other unsecured creditor. They aren't the equivalent of a homestead.
Pensions could also possibly be treated the same as employee pay (first in line) which appears to be the way that Michigan law wanted it to be treated when the law was passed.

Unless you can quote a federal law, we are just speculating. Unless the Michigan attorney general finds some federal law that overrides Michigan law, he's bound to lose the appeal. I suspect they are now trying to find some basis for the appeal. If one can't be found, what may have to happen is the state passes a law to overturn the bankruptcy protection law (if they have the votes) and then Detroit declares bankruptcy again.

Republicans seem to defend states rights to their last breath until they don't like state laws and then they try to ignore them or pass federal laws to enforce their ideology in all states.

Last edited by Michael; Jul 21st 2013 at 3:33 am.
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