Detroit attorneys put down bankruptcy papers and knock all individual objections

Recent reports suggest that Detroit has hit back against opposition to its bankruptcy and has said that filing bankruptcy wouldn't cut down pensions. The Detroit attorneys made their case final and put down bankruptcy papers in court on Friday, 6th. Unlike individuals and corporations, the city requires to prove that it's eligible for bankruptcy protection from the creditors and there are large number of oral arguments that will soon begin in the later half of September in the US Bankruptcy Court in Detroit.

While the court papers were filed on the 6th of September, Friday, the city disapproved a number of objections one by one, taking on the pension funds, the unions and all the other creditors who were predicted to oppose the Detroit Bankruptcy in a series of hearings that were about to start later in October. Moreover, the Detroit bankruptcy papers were constructed to meet each and every qualification of bankruptcy, under Chapter 9 bankruptcy code. With the present condition of the city, in order to proceed into bankruptcy, Detroit needs to overcome 109 objections, which come mostly from the labor unions. The range of objections include accusations that the city couldn't negotiate in good faith and that the state-appointed emergency over-stepped his legal authority through bankruptcy filing.

As Detroit had to file bankruptcy, the city has to persuade federal bankruptcy judge Steven Rhodes that the city is insolvent and that it had the authority to file bankruptcy. The city also proposed to implement a debt reduction plan. Detroit should also show that it had tried its best to negotiate with its creditors or it had to prove that the number of creditors are so large that the negotiations weren't possible for the city to repay.

If there are people who are wondering about the reasons behind which the state declared this financial emergency, here's an answer for them. Their debt obligations include around $18 billion in debt to over 100,000 creditors, over 100 discrete issuances of bonds and related personal loans from multiple lenders and nearly 50 union bargaining units that represent the employees of the city. Due to all these debt obligations, the city opted for a Chapter 9 bankruptcy on 8th of July, 2013. Their petition included the fact that Detroit was both budget insolvent and cash insolvent and not only that, they were also "service-delivery insolvent". Without even giving the thought of restructuring, Detroit is of the opinion that they might require going through negative cash flow as it's impossible for the city to materially improve the revenues and reduce expenses.

There are some contradictory reports about Detroit's Chapter 9 bankruptcy filing as the unions suggest that they've violated the US Constitution's protection of states rights. However, pat came the answer from Detroit that since states have a legal choice as to whether they should allow their municipalities to file Chapter 9, this kind of bankruptcy is not at all an unconstitutional transgression of the sovereignty of the state.

Despite all such speculations, the bankruptcy experts are predicting that Judge Rhodes will certainly find Detroit eligible for bankruptcy. Even then, the city will still continue facing challenges to this plan, particularly including disputes over the treatment of unsecured debt and bonds.