Orr Says Lawsuits Made Him Seek Detroit Bankruptcy Protection

Moratorium NOW! Coalition called a demonstration a Greater Grace Temple in Detroit to oppose Emergency Manager Kevyn Orr who had cancelled a scheduled meeting. Participants called for abolition of the EM. (Photo: Abayomi Azikiwe), a photo by Pan-African News Wire File Photos on Flickr.

Orr Says Lawsuits Made Him Seek Detroit Bankruptcy Protection

By Chris Christoff - Jul 19, 2013

Lawsuits and passing time were reasons to put Detroit into bankruptcy, Emergency Manager Kevyn Orr and Michigan Governor Rick Snyder said a day after the city filed for protection in federal court.

Orr and the Republican governor who appointed him told Bloomberg News in an interview in Detroit that it became clear that too few creditors would accept a plan Orr put forth June 14 to pay off $11.5 billion in unsecured debt with $2 billion in borrowed money -- an offer that would have given them as little as 10 cents on the dollar and cost pensioners benefits.

Snyder said Orr told him last month he’d know in 30 days whether a deal outside bankruptcy was possible.

“By July 14, there should be a pretty good assessment of where we stand in terms of creditors coming to the table or not,” said Snyder, 54. “Some creditors did come to the table. Many others ran into court, though.

‘‘Let’s leverage bankruptcy in a positive way. The court is created to bring all these issues to the table and address them in a positive way.’’

Michigan’s largest city, an erstwhile industrial giant, joins Jefferson County, Alabama, and San Bernardino and Stockton in California in bankruptcy with its record $18 billion filing.

Peacefulness Punished

Orr and Snyder said Detroit’s crisis, 60 years in the making, would take time to resolve. Orr’s term as emergency manager isn’t limited, though he and Snyder assume that 18 months after his March appointment he will be dismissed by a two-thirds vote of the City Council, as state law allows.

Orr, 55, said the decision to enter bankruptcy came after after a long build-up of resistance to his plans after what he called an olive-branch approach to creditors.

‘‘What did we get for that? We’re getting sued, consistently,” Orr said.

“There were questions about my sanity and standing by and not making a recommendation to the governor that we do something about it, because people were getting frustrated with how long we were taking in an environment where we were receiving hostile actions.”

Orr said Detroit residents would see improvements in services within 60 days as he shores up funding. And he said he has no plans to sell assets, such as the city-owned collection at the Detroit Institute of Arts.

“There’s nothing for sale, including Howdy Doody,” he said at a news conference, referring to the original puppet used on the 1950s children’s television show, now in storage at the institute.

Snyder said bankruptcy was among his most difficult decisions.

“This is probably one of the most challenging situations in the entire United States,” he said. “Let’s get to stability, let’s get to growth again in Detroit instead of watching the can get kicked down the road, which has gone on far too long.”

To contact the reporter on this story: Chris Christoff in Detroit at cchristoff@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net