Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Emergency Manager Orr: Detroit Nearing Municipal Bankruptcy
Author: Joel R. Glucksman
Date: May 30, 2013
Key Contacts
Back
The once-bustling city of Detroit may be weeks from seeking municipal bankruptcy protection, according to the findings of a report from appointed emergency manager Kevin Orr.
Orr’s analysis reveals that the city is short of cash and faces the very real risk of running out of funds to maintain city services, pay employees, and fund retirement pensions and benefits. Detroit is currently facing $15 billion in long-term debt, as well as a growing deficit. Under-funded pensions are another factor making it difficult for city officials and the creditors to reach an accord. According to sources, reduced debt payments are the only available option for keeping the city afloat and avoiding the beginning of Chapter 9 municipal proceedings under bankruptcy law.
The emergency manager said he will know in roughly six weeks if creditors, unions, and other parties can reach an agreement that will allow for this debt reduction and sustain Detroit through the worst cash flow crisis that the city has ever faced.
In an interview with reporters, Orr was careful not to criticize city officials, but did say that Detroit’s current financial issues are the result of decades of mismanagement and neglect.
“What stands out to me is 40 years of dropping demographics, of reducing revenues – you don’t get the magnitude of neighborhood blight we have overnight – of no one having a plan or solution for that, of inviting, quite frankly, some class of residents to leave,” Orr said, according to the Detroit Free Press. “And they did. They literally went across 8 Mile and started building buildings in Southfield. Without a vision for what you want your city to be three, five, 10, 20, 30 years out, the totality of those circumstances drove us here.”
He noted that while the city’s financial picture was worse than he expected, decisions about bankruptcy will not be made for another 30 to 60 days.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
New Jersey’s Next Manufacturing Tax Credit: Stability Secured, Timing Matters
A Settled Regulatory Environment Enables Confident Capital Planning New Jersey’s new manufacturing incentive program, Next New Jersey Manufacturing Program, enters 2026 with something uncommon in economic development these days: policy stability. The statute is enacted, New Jersey Economic Development Authority’s (“NJEDA”) rules are adopted, and the application portal is open. With the election outcome settled, […]
Author: Michael J. Sheppeard
A Simple Guide to Industry Roll-Up Acquisitions
When done successfully, industry roll-up acquisitions can dramatically grow and strengthen your business. In this post, we break down what an industry roll-up is, why companies pursue it, and what makes it an effective (and sometimes risky) business strategy. What Is an Industry Roll-Up Acquisition? In an industry roll-up acquisition of companies, a buyer acquires multiple companies […]
Author: Dan Brecher
Genesis Mission: How the U.S. Government’s New AI Platform Will Reshape Corporate Innovation, Risk, and Competition
The federal government has launched one of the most ambitious scientific initiatives in decades, and it will redefine how companies develop technology, manage risk, and compete. The Genesis Mission, created by Executive Order and driven by the Department of Energy (“DOE”), is intended to accelerate scientific discovery through a national AI platform that links supercomputers, […]
Author: Michael J. Sheppeard
Stablecoins and the GENIUS Act: How New Global Rules Are Reshaping Compliance
Stablecoins Leave the Grey Zone Stablecoins were supposed to be the “boring” part of crypto: digital dollars that just work. Yet for years they have lived in a regulatory no-man’s-land, classified one day as securities, the next as commodities, and sometimes as something regulators had not even named yet. That uncertainty is finally starting to […]
Author: Bryce S. Robins
Don’t Overlook the Importance of Business License Management
If you operate a business without the proper license, you risk fines, insurance issues, reputational harm, and even business closure. Even innocent mistakes, like forgetting to renew a license, can have significant consequences, such as losing your lawsuit for payment of services that are unlicensed, which makes it imperative to have business license management procedures […]
Author: Dan Brecher
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
Author: Patrick T. Conlon
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.