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Thread: Hiroshima VS. Detroit

  1. #61
    Senior Member road kill's Avatar
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    State laying groundwork for managed bankruptcy for Detroit

    Daniel Howes

    Even as the state Treasury prepares to begin another financial review of Detroit's books, a plan is being solidified in the governor's office that would guide Michigan's largest city through what is being called a managed bankruptcy.

    The working concept, still evolving, assumes that the state's financial review would find severe financial distress in Detroit, that Mayor Dave Bing and City Council would be unable to push through overdue restructuring, and that the process would culminate in appointment of an emergency financial manager under Public Act 72.

    The case would be filed under Chapter 9 of the federal bankruptcy code, according to two ranking sources familiar with the situation, following efforts to reach prenegotiated settlements with as many key creditors unions, vendors and pension funds among them as possible before any filing.

    "Clearly, we will always try to do that," one source familiar with the situation said in an interview Thursday. "You can move on a much more expedited basis if you can demonstrate that your cash is running out" as Detroit clearly is with each passing week.

    The evolving bankruptcy scenario is a clear signal that Gov. Rick Snyder and Treasurer Andy Dillon have lost confidence in the ability of the mayor, his management team and council to honor their commitments under the eight-month-old consent agreement with the state, or to make any meaningful progress on restructuring.

    Contingency planning in Lansing for a possible Chapter 9 bankruptcy filing is not likely to be popular inside council chambers or the Mayor's Office. But it's the responsible and necessary thing to do, whatever the protests from the elected officials whose denial and self-delusion are hastening the arrival of a reckoning they can no longer avoid.

    The goal of a managed bankruptcy is to streamline the protracted process by minimizing the chaos, uncertainty, delay and steep costs associated with Chapter 9. It would be the largest municipal bankruptcy in the nation's history, an unambiguous symbol of the city's epic failure and a chance for a fresh start.

    "That's exactly the strategy you should do," said Douglas Bernstein, managing partner of Plunkett Cooney's banking, bankruptcy and creditor rights group. "You're never going to be able to get all the unions and all you need to agree in advance, not a chance. You try to do it outside of bankruptcy or you drop it in. It's prudent, too. It's very prudent."

    In bankruptcy, pre-packaged deals arrange settlements with all creditors in advance of a filing that is usually followed quickly with a plan of reorganization (called "plan of adjustment" in Chapter 9). A pre-negotiated deal akin to the one being explored in the Governor's Office would reach settlements with some creditors and leave others to be litigated in court.

    A Chapter 9 filing for Detroit may be increasingly likely given the dysfunction and infantile posturing atop City Hall. But bankruptcy is not yet certain, provided three obstacles can be removed or settled outside of court: pending litigation designed to slow the process; pension debt of $1.4 billion and $440 million in outstanding swap contracts; and liabilities for retiree health care.

    Planning for a possible bankruptcy of Detroit should not be surprising coming from Snyder, an accountant-turned-CEO, and Dillon, a former investment banker. Both possess keen financial minds, strategic savvy and a habit for planning further ahead than most politicians, particularly the elected officials in Detroit flailing from one crisis to the next.

    In anticipation of Detroit's financial collapse, for example, Dillon retained an investment banking firm in December 2010 before taking office to advise the Treasury on ways to restructure Detroit's balance sheet, reduce its liabilities and return the city's credit rating to investment grade.

    City Council, by comparison, is blocking the mayor's effort to hire a local law firm, Miller Canfield, citing conflicts of interest. Nor has the city, likely about a month away from Snyder appointing an emergency financial manager, showed any inkling of forward planning and retained bankruptcy counsel.

    It should, because there is no president of the United States or consortium of banks coming to the rescue. Both Public Act 72, the existing emergency financial manager law, and revised legislation that passed the House this week enable an emergency financial manager and his counsel to negotiate settlements with creditors in advance of a Chapter 9 filing.

    Under Public Act 72, an emergency financial manager cannot move to abandon the city's financial workout plan in favor of bankruptcy until 180 days have passed. But the timeline to Chapter 9 filing can be accelerated if the city is in danger of running out of cash.

    Still, bankruptcy for Detroit would require the governor to first appoint an emergency financial manager. The appointee would be charged with devising a financial plan, making it public and beginning the effort to execute it unless the city's meager cash hoard runs out first.

    It probably will, which is why the governor and his treasurer are taking their jobs seriously and planning for the worst. Someone has to.


    From The Detroit News: http://www.detroitnews.com/article/2...#ixzz2EO8FL2Kr
    Amazing..............
    Stan b & Elvis

  2. #62
    Senior Member menmon's Avatar
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    Need to clean it up....best thing that could happen

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    Senior Member zeus3925's Avatar
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    [QUOTE=caryalsobrook;1041665]
    Quote Originally Posted by zeus3925 View Post
    By the way, Cary, your assertion that the TVA states are now the center of auto production is not borne by facts. In terms of employment, Michigan is number one and Ohio is number two. The traditional car and parts production is still dominated by the North.

    http://www.bls.gov/iag/tgs/iagauto.htm[/QUOT
    I could be wrong but I have read that Michigan is #4 in the production of autos and Tn is #1. Maybe that is wrong. What I do know is that Nissan based in smyrna Tn. continues to increase production and new hires. Same for toyota, mercedes, vw, all based in the South. Not just yesterday and today, but for last year and the year before and before that. None needed a bailout. They did not need a bailout because they have maintained quality and kept their labor costs at a level that they can remain competitive(a responsibility of management, I might add). Looking at Detroit, one might surmise that is not the case there. In any event to say that the auto industry is dominated by the north is like saying a school with the large football stadium(tennessee?)dominates even though they have a losing team(and the fans are not showing up.

    PS Interesting that you should associate TVA with the states. You might check the history of TVA. The Gov. seized far more land via imminant domain at very little cost and have been selling the excess land at huge profits. Talk about the good, the bad, and the ugly, you could also have a college degree when studying TVA.
    Here is another link. Michigan is still #1.

    http://blogs.cars.com/kickingtires/2...s-workers.html

    http://www.cnn.com/2008/US/12/12/map.us.auto/index.html

    There are many reasons to a manufacturing facility along with labor cost. Important is the skill level of the work force. Also a consideration is the costs and availability of materials needed in manufacturing. Another is energy cost. (Thanks to TVA that provides a inexpensive source.) Other considerations are access to markets. Cost of real estate is another factor.
    Last edited by zeus3925; 12-07-2012 at 07:59 PM.
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    [QUOTE=zeus3925;1042056]
    Quote Originally Posted by caryalsobrook View Post

    Here is another link. Michigan is still #1.

    http://blogs.cars.com/kickingtires/2...s-workers.html

    http://www.cnn.com/2008/US/12/12/map.us.auto/index.html

    There are many reasons to a manufacturing facility along with labor cost. Important is the skill level of the work force. Also a consideration is the costs and availability of materials needed in manufacturing. Another is energy cost. (Thanks to TVA that provides a inexpensive source.) Other considerations are access to markets. Cost of real estate is another factor.
    You are right and I was wrong. Some organization rates Tennessee the #1 auto state(whatever that means). I never said that labor was the only factor in Mich.'s lack of competiveness. Certainly there are many factors. as for TVA, it's electrical rates are not nearly as low as in the past. While at one time they had the lowest rates in the country, I don't believe that to be true today. You mention TVA as an advantage in the production of cars but fail to mention such things as the Fantom Freight Law requiring freight charges to be comuted as if the steel was shipped from Pittsburg, no matter where it was made, resulting in Mich and Ohio paying less in freight on steel than Tn would have. Not once have I blamed labor, on the contrary, labor can do nothing without the consent of mgmt. I remember when the UAW claimed that job security was the major point of bargaining and touted the new contract as "guaranteeing job security for it's members". Surely the union reps knes that job security goes only as far as the fiscal integrity of the company(barring Gov. bailouts).

    There are many things that unions advocate that resrict comppetiveness but there are some that actually improve competiveness, long term labor contracts guaranteeing stability of labor costs over a period of time is an example. If you are to succeed, you must compete. If you cannot compete successfully, you fail

    .
    I do know one thing, barring gov. bailouts, the future of the auto industry in the south looks far better than in Mich. and ohio. It may not stay that way because evidently Mich appears ready to try something different than the ways that have gotten them in the shape they are.

  5. #65
    Senior Member road kill's Avatar
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    Quote Originally Posted by road kill View Post
    Anyone get this e-mail?

    I can't figure out how to post all the pictures, pm me you e-mail, I will send it to you!!

    It's pretty amazing.
    It is deliciously ironic.
    It is devesatingly sad.......but true.

    A nuclear bomb couldn't do what progressives can!!!
    After 50 years plus of liberal Democrat rule.......BANKRUPTCY!

    Well, this is were the progressives are taking America!

    Who is next?

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    One said to the other..."The thing I hate about obedience school is you learn ALL this stuff you will never use in the real world."

  7. #67
    Senior Member road kill's Avatar
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    City of Detroit Files for Bankruptcy

    Detroit— The city of Detroit filed the largest municipal bankruptcy case in U.S. history Thursday, culminating a decades-long slide that transformed the nation’s iconic industrial town into a model of urban decline crippled by population loss, a dwindling tax base and financial problems.

    Gov. Rick Snyder justified approving the historic filing by reciting a litany of the city’s ills, including more than $18 billion in debt, maxed-out tax rates, the highest murder rate in 40 years, 78,000 abandoned buildings and a half-century of residential flight. He said the city failed to provide basic services to residents or pay creditors.

    The filing, which has broad implications for the nation’s municipal bond market and sanctity of public pension funds, was met with outrage, disappointment and a vow to fight. Some creditors adopted a war stance, threatening a prolonged battle. Others accused Emergency Manager Kevyn Orr of failing to negotiate in good faith — an essential requirement for approval of a bankruptcy petition — during his month-long push to secure concessions from creditors, including deep cuts to pensions.

    “It’s war,” said George Orzech, chairman of the city’s Police and Fire pension fund.

    The 16-page bankruptcy petition was shrouded in secrecy and filed amid drama. Snyder planned to file the bankruptcy petition today in U.S. District Court but reversed course after learning the city’s pension funds planned to ask a judge to block a filing, according to a source. The petition was filed at 4:06 p.m. Thursday and cost the bankrupt city $1,213.

    Eighteen minutes later — too late to make a difference — Ingham County Circuit Judge Rosemarie Aquilina signed a restraining order.

    Snyder authorized Orr to file bankruptcy under a controversial law the Legislature passed in December that replaced the previous emergency manager law voters repealed last November.

    “There were no other viable alternatives,” Snyder told reporters Thursday. “We have a great city but a city that has been going downhill for 60 years.”

    Orr said he will continue trying to secure deals with additional creditors that could ease the city’s path through bankruptcy court. He said he hoped the city could restructure and emerge from bankruptcy court next year, by late summer or early fall.

    During a month of negotiations, Orr has reached a settlement with only two creditors: Bank of America Corp. and UBS AG. They have agreed to accept 75 cents on the dollar for approximately $340 million in swaps liabilities, according to a source familiar with the deal.

    Orr had harsh words for those who tried to block the city’s restructuring efforts.

    “We don’t have time for more delaying tactics,” Orr said.

    Orr insisted he “bent over backwards” and negotiated in good faith during more than 100 meetings with creditors. In court filings late Thursday, he said it was impossible to reach an accord with “many tens of thousands of creditors” and accused unions of refusing to negotiate on behalf of the city’s 20,000 retirees.

    The filings also indicated that Orr may be open to offers on the Detroit Institute of Arts’ collection, which is worth billions. Orr said he will continue to “engage all interested parties in dialogue regarding the City-owned art collection” and “reach a resolution with respect to such assets that will maximize the long term benefits to the City and the prospects for a successful restructuring.”

    Orr also will continue to evaluate how much money the city could collect by selling other assets, including Belle Isle, the Detroit-Windsor Tunnel, real estate and municipal parking operations.

    Mayor Dave Bing, whose powers were usurped when the governor appointed Orr in March, spoke of Thursday’s moves with a mix of resignation and optimism.

    “As tough as this is, I didn’t want to go in this direction,” Bing said. “Now that we are here, we have to make the best of it. If it is going to make citizens better off, this is a new start for us.”

    But not until creditors feel varying degrees of pain, experts said.

    Unsecured creditors could take the biggest hit in bankruptcy court. Orr wants them to share a $2 billion payout on approximately $11.5 billion worth of debt, which includes an estimated $9.2 billion in health and pension benefits and $530 million in general-obligation bonds.

    “Pain is going to be handed out to a number of creditors simply because Detroit has no other option,” said Dan Heckman, senior fixed income strategist with U.S. Bank Wealth Management in Minneapolis.

    Orr chronicled the city’s economic collapse in a detailed plan presented to creditors June 14 — a proposal that drew criticism from some who said the cuts were too deep and did not include the sale of city assets, including Belle Isle and a Detroit Institute of Arts collection. He proposed paying most of the money owed to secured creditors while pension funds, unions and unsecured bondholders would receive, in some cases, as little as 10 cents on the dollar.

    Instead of paying creditors in full, Orr said he would use $1.25 billion over the next decade to buy police cars and fire trucks, replace broken street lights, tear down burned-out homes, fight blight and improve city services.

    Orr said he wants to stabilize the city, woo new residents, provide essential city services, lower property taxes and transfer costly departments, including the water and sewerage, to an outside group.

    The bankruptcy filing gives Orr unusual power to break promises made by past city officials that left Detroit on a path to spending almost 65 percent of every tax dollar on retiree pensions and health care.

    The Chapter 9 filing could take years, experts said, despite hopes by Snyder and Orr thatit can be wrapped up in a year. A bankruptcy judge could trump the state constitution by slashing retiree pensions, ripping up contracts and paying creditors roughly a dime on the dollar for unsecured claims worth $11.45 billion.

    “Detroit cannot afford any further attacks on working families, who have already sacrificed so much without a say in the process,” Metro Detroit AFL-CIO president Chris Michalakis and Michigan State AFL-CIO president Karla Swift said in a statement. “City workers have already made severe concession to keep the city afloat. It is time to put the needs of Detroit residents above the interests of out-of-town creditors.”

    The filing is expected to trigger a costly, long and precedent-setting battle by creditors — the city has more than 100,000. Detroit’s bankruptcy case could become a template for the treatment of pensions in future municipal bankruptcies.

    “The negotiations from here are likely to be long and complex, offering no resolution or clarity perhaps for years,” said Peter Hayes, who heads BlackRock’s Municipal Bonds Group. “Ultimately, it’s important for market participants to understand that Detroit is the exception and not the rule. This is first and foremost a Michigan issue, not a systemic municipal market issue.”

    The bankruptcy case will be assigned by Alice Batchelder, chief judge of the 6th U.S. Circuit Court of Appeals, which spans Michigan, Ohio, Kentucky and Tennessee. Any judge in the four-state region could be assigned the case, though Batchelder will weigh potential political concerns and decide who has the time and capability to handle a complex, large case in Detroit.

    Once the nation’s fourth largest city, Detroit was hailed as an industrial hub with nearly 2 million people.

    Today, there are about 700,000 residents after a half-century of residential flight, high unemployment, a significant reduction in state funding, plummeting income and property taxes, corruption and chronic mismanagement.


    The filing serves as a grim reminder of the bankruptcies in the auto industry four years ago. Unlike the cases of General Motors and Chrysler in 2009, the White House offered no financial help.

    Steven Rattner, the Obama administration’s auto czar who steered the General Motors and Chrysler bailouts, said the state will have to help fund Detroit’s exit from bankruptcy.

    “It’s really ugly,” Rattner said Thursday.

    20 largest creditorsHere are the city’s 20 largest unsecured creditors and type of claim:
    ■General Retirement System: (A) $2 billion
    ■Police and Fire Retirement System (A) $1.4 billion
    ■U.S. Bank (B) $801 million
    ■U.S. Bank (B) $516 million
    ■U.S. Bank (B) $153 million
    ■U.S. Bank (C) $79 million
    ■U.S. Bank (C) $61 million
    ■U.S. Bank (C) $59 million
    ■U.S. Bank (C) $45 million
    ■U.S. Bank (C) $40 million
    ■U.S. Bank (C/E) $38 million
    ■U.S. Bank (C) $38 million
    ■U.S. Bank (C) $35 million
    ■Downtown Development Authority (D) $34 million
    ■U.S. Bank (C) $30 million
    ■U.S. Bank (E) $25 million
    ■U.S. Bank (C) $19 million
    ■U.S. Bank (C) $19 million
    ■U.S. Bank (C) $13million
    ■U.S. Bank (C/E) $11 million
    (A) pension funds; (B) certificate of participation; (C) general obligation bond; (D) loan payable; and (E) capital improvement bond. Source: City of Detroit


    rsnell@detroitnews.com
    (313) 222-2028
    News Staff Writers Darren A. Nichols and Christine Ferretti contributed
    The liberals in Detroit just plain "ran out of other peoples money!"



    From The Detroit News: http://www.detroitnews.com/article/2...#ixzz2ZU7DFqQP
    Last edited by road kill; 07-19-2013 at 05:44 AM.

  8. #68
    Senior Member coachmo's Avatar
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    Who is actually to blame for this? Surely, it won't be the liberals that have been in charge for years!! HA!!!

  9. #69
    Senior Member Rose's Mom's Avatar
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    <<<<< On the campaign trail, particularly in the Midwestern states dependent on the auto sector, Obama trumpeted his cash infusion to major American car companies as part of his populist pitch to blue-collar voters.“I wasn't going to let Detroit go bankrupt. Or Toledo go bankrupt. Or Lordstown go bankrupt. I bet on American workers,” Obama said in the final sprint to November’s election.
    And Obama and his campaign demonized Republican presidential candidate Mitt Romney for a New York Times op-ed headlined, “Let Detroit Go Bankrupt.”>>>

    http://washingtonexaminer.com/detroi...rticle/2533251

    This puts in perspective the moneys wasted and the heartache and the suffering that transpired out of feel good, I will take care of you speeches - all for votes and political gain.

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    Senior Member Franco's Avatar
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    Quote Originally Posted by BonMallari View Post
    the Best things to come out of Detroit

    1. Al Kaline

    2. Bob Seeger and the Silver Bullet Band

    3. Mitch Ryder

    4. The Supremes
    Lets don't forget Ted Nugent, Kid Rock and John Lee Hooker! Alice Cooper is from Detroit too but he was more a stage act than anything else.
    It's time we abandon our party affiliations and rather than being good Dems or good Repubs we all become good Americans. MJH345

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