Court To Decide on Detroit Bankruptcy

Emergency manager faces off against unions and pension funds over whether Chapter 9 proceedings can go forward

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The city of Detroit will face off against unions and pension funds in an unusual trial starting Wednesday that will determine if the city’s bankruptcy case can go forward.

Detroit’s state-appointed emergency manager Kevyn Orr — who filed for Chapter 9 bankruptcy in July in the largest municipal bankruptcy filing in U.S. history — will make the case that the city has no choice other than to undergo bankruptcy proceedings to resolve it’s more than $18 billion in debt. In order to be eligible, Detroit will have to show that it negotiated in good faith with creditors, the Associated Press reports.

Public sector unions accuse Orr of planning to file for bankruptcy long before negotiations had run their course, but Orr argues that pension funds are short $3.5 billion, and that the city can barely provide essential services.

[AP]

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