Detroit Bankruptcy Imminent

Tyler Durden's picture

Following the State's takeover of Detroit's finances in March, it seems the end is growing 'nigh'er for the troubled city. According to the WSJ, Kevyn Orr, Detroit's emergency manager, plans to call unions and creditors to a meeting in mid-June to lay the groundwork for a bankruptcy within a matter of months. The meeting is designed to restructure the long-struggling city's liabilities of over $17bn and is an attempt to "have a mature and sober discussion" of repayment terms following its delayed payment in April of $226 million on pensions and other obligations. Several unions said they are willing to come to the table, but believe "it's a scare tactic." Up to now, Gov. Snyder and Detroit elected officials have said they want to avoid using bankruptcy (Detroit would be the biggest muni filing ever) to clean up the city's mess. But in recent days, their positions have softened, adding that, "I don't want to go to bankruptcy, but I do know that it is a strong possibility." Mr. Orr's office confirmed it was evaluating the potential sale of prized assets such as the artwork at the Detroit Institute of Art, a collection potentially worth billions.

 

Via The WSJ,

Kevyn Orr, appointed by Michigan Gov. Rick Snyder in March to take control of the long-struggling city, plans to use the meeting to present a detailed restructuring plan for Detroit's liabilities, which he says total about $17 billion.

 

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Over the coming weeks, Mr. Orr is expected to ask the city's largest unions, pension funds, creditors and bondholders for concessions. It is unclear whether such moves could stave off bankruptcy - or pave the way for it by serving as a template for a court-supervised reorganization.

 

A bankruptcy filing likely would be the largest ever by a U.S. municipality in terms of debt outstanding, surpassing that of Jefferson County, Ala.

 

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On average, since 2008, Detroit has spent $100 million more a year than it collected in taxes and other revenue.

 

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On June 15, the city is due to make a debt payment estimated at more than $30 million, according to a person familiar with the matter. It is possible Mr. Orr will decide not to make the payment to conserve cash

 

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Detroit had $64 million cash on hand in April but owed $226 million in payments on pensions and other obligations, forcing the city to delay paying its bills to stay afloat,

 

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Union representatives criticized city leaders for failing to implement cost-saving reforms. Some dismiss the idea that Mr. Orr might push Detroit into bankruptcy.

 

"I think it's a scare tactic," said Ed McNeil, assistant to American Federation of State, County and Municipal Employees Council 25 President Al Garrett, the city's largest union for municipal workers. "It's been something like six times that the city was going to go bankrupt. But it never happened and they never had a payless payday."

 

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Mayor Bing said in an interview last week, "I don't want to go to bankruptcy, but I do know that it is a strong possibility."

 

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Mr. Orr sharpened the debate about bankruptcy in late May when his office confirmed he was evaluating the potential sale of prized city assets, including the artwork at the Detroit Institute of Art, a collection potentially worth billions.

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The Shootist's picture

First to become America's Chernobyl.

knukles's picture

Hah ha ha ha ha ha

Coming together to "have a mature and sober discussion"....

Gotta be fuckin' kiddin' me gotta take a cut in damn pension?
Where be Obama and his stash, like a dat GMotors, Yo?

King_of_simpletons's picture

Wall Street is giddy about this. Good for another 200 points up day tomorrow.

Atlas_shrugging's picture

I dunno about that but the Snake Plissken pic kicks ass

Ahmeexnal's picture

Goldman Sachs has already purchased Detroit.

SafelyGraze's picture

"Kevyn Orr, Detroit's emergency manager, plans to call unions and creditors to a meeting in mid-June to lay the groundwork for a bankruptcy within a matter of months. "

yo! mario!

man up! be like Kevyn!

there is no plan B

fourchan's picture

detroit will default, wayne county will default and hamtramck will default on their bonds. 

 

the art and prime real estate will be bought by the same people who set this up, its a public art heist.

marathonman's picture

So who's the next AIG that will blow up when the credit default swaps, CDO's, synthetic CDO's, and other fantastic financial instruments cause the daisy chain destruction that was so awesome to behold in 2008?

greyghost's picture

artwork worth "BILLIONS"...wtf moment

nmewn's picture

One would hope the guards are paid well and are of the highest integrity ;-)

El Oregonian's picture

Insiders get the inside track to purchasing city assets pennies on the dollar and the taxpayers again take it in the corn-hole and are left holding the bag.

rbg81's picture

Are there any taxpayers left in Detroit?  Methinks that's part of the problem.  Detroit is the result of 50+ years of liberal policies.

kralizec's picture

Yeah, can't be much left of the city either...just toss a match and walk away...

Urban Redneck's picture

But that would wipeout the USD$ 1Billion in Detroit real estate holdings of the pensions of the Fire & Police Unions... 

 

(Not that the same couldn't be achieved with the stroke an honest accountant's pen)

Urban Redneck's picture

You should take a look at what the ass clowns who manage the Detroit public sector pension funds think the derivatives that they have on their books from Lehman Brothers are still worth... (when not being brought up to date on the latest accounting scams at a posh Hawaiian resort)

 

jerry_theking_lawler's picture

was it donated? now they are going to reap the benefits....for a few months, anyways.

BC6's picture

Snake Plissken bitchez!

Go Tribe's picture

Obama's stash is back in the woodpile where he came from.

SmokeThatHog's picture

"I don't know, from his staaaash!"

That shit is/was classic.  

Freddie's picture

$18 billion in debt?  There is nothing there any more just derelict buildings, welfare leeches and misery.

Meanwhile - the Democrats and RINOs was 11-20 million illegals made citizens plus 25 million of their family members.  We are watching a country committ hari kari.  The Russian professor was correct when he said the USA will broeak up and implode.

ClassicalLib17's picture

Freddie,  I tried to give you a thumbs up and got an error notice.  Why does this happen for some comments but not others?

Tijuana Donkey Show's picture

Freddie, install this on your computer. http://afterthedeadline.com/ It will help people take your posts seriously. 

RafterManFMJ's picture

The best use for Detroit at this point is an artillery range.

Brit_Abroad's picture

Ah come on, Drone range

Artillery is so last century.

HelluvaEngineer's picture

"Detroit?  I heard you were dead."

Theosebes Goodfellow's picture

Nice one, Injun-ear! +10! Excellent movie trivia knowledge!

Scro's picture

Send ALL welfare recipients to Detroit and see how many want out (of Detroit and the welfare system).

Buck Johnson's picture

No kidding, when this city implodes it will send a shock into the muni bond market.  Also if you think Detroit is the only one, think again. 

fourchan's picture

i live here too, we are the beginning.

Hippocratic Oaf's picture

Buck

It's relatively priced in.

There will be no 'shock'

Dingleberry's picture

Been to the "D" many times.  Detroit is the canary in the coalmine. It is "Exhibit A" for what happens when you have a complete liberal-induced breakdown of the family. A feral wasteland, devoid of any semblance of morality, decency or respect for anything or anyone.  

Chicago ain't far behind.

And the craziest thing is.......wait for it......the fucking stupid ass liberal deomcraps who created this mess with their "compassion" actually blame conservatives for what is happening.  Despite being repeatedly warned about what exactly has transpired. 

Democratic liberal politics and economics on display (for at least 4 decades) for your edification.

The place is a feral wasteland. Not even Mad Max would go there. Neither would Jake "the Snake" Plissken, nor Rambo. 

You stupid fuckers in Cali and such that think you can get away with this bullshit because of the sunshine tax....just wait. Winter is coming. 

And I got plenty of popcorn.

john39's picture

what happened? central banking happened...

walküre's picture

"Detroitification" is a symptom of globalization and NWO

why the city didn't go BK when GM did is beyond me

only good part about Detroit default is the domino effect and the wake-up effect for Americans everywhere

Hello! Party is over! We're broke and done spending our kids and grandkids money. It still wasn't enough.

Freddie's picture

One of their excuses why Detroit imploded was that "whites moved away."

 

NemoDeNovo's picture

Can you blame them?  The "Whites" that is....

Tijuana Donkey Show's picture

White collar jobs! Detroit is a dive, everyone moved to Troy....

walküre's picture

that's a declaration of failure in my book

Anusocracy's picture

World leading boomtown to world's biggest ghost town in a hundred years.

Thanks to our lord and master - the government.

dow2000's picture

Coincides nicely.with 100 years of tyranny under the federal.reserve.

MisterMousePotato's picture

Took only 30 years, really, although the seeds were planted earlier.

Meat Hammer's picture

Ain't gonna be there No Mo........town.

OldE_Ant's picture

lol You honestly think it's the Libtards fault.  Dream on camper.   The entire system repuke and libtard is 'broke', and even with the FED stuffing money via helicopter drops to select clients can't fill the tank enough for anything to trickle down anymore.

Glad you have popcorn because you are one of the many who are just sitting back doing nothing while the entire system is folding in on itself.

Dingleberry's picture

Society has shown it can survive the fed. Society can survive depressions, wars, plagues, anything. 

What it cannot survive is a total lack of individual or collective morality.

The government affects you tangentially if you are decent and hardworking.

It controls your life if you are a welfare recipient.

See the difference? 

 If not, go to Detroit and see for yourself.