Experts have suggested Detroit's bankruptcy process could drag on for as long as three years, but U.S. Bankruptcy Judge Steven Rhodes has other ideas.
Rhodes is fast-tracking the process, proposing an expedited timeline to review eligibility objections and craft a plan of adjustment.
Freep: In a notice filed today, Rhodes proposed an Aug. 19 deadline for all motions arguing against Detroit’s eligibility for Chapter 9 bankruptcy. A trial on that question would begin Oct. 23.
Detroit Emergency Manager Kevyn Orr had asked the judge to set a one-month deadline for objections to the city’s right to file for bankruptcy.
Rhodes also proposed March 1 as a deadline for the city to file a plan of adjustment. In a municipal bankruptcy, this plan presents creditors with reduced payments for their outstanding debts. The plan of adjustment must be approved by a certain percentage of creditors.
Previous municipal bankruptcies have been challenged by creditors, resulting in protracted legal fights and the dismissal of some bankruptcy filings. In Vallejo, CA, the argument over whether it was appropriate for that community to file bankruptcy lasted a full year. Municipalities are required to negotiate settlements in good faith with creditors before they're eligible to file for Chapter 9 bankruptcy protection.
