The Herald Bulletin

Morning Update

Nation & World

August 20, 2013

Creditors file objections to Detroit bankruptcy

(Continued)

DETROIT —

"Hopefully, we'll have the opportunity to argue why Detroit should not be allowed to go into bankruptcy," said the Rev. Charles Williams II, Michigan chapter president of the National Action Network, a grassroots organization that opposes the state's emergency law.

But only creditors holding accepted claims likely have standing to object to Orr's petition, according to James McTevia, a turnaround expert and managing member of McTevia & Associates.

"While there is no doubt that ... residents are seriously affected by the city of Detroit's problems and the ultimate resolutions, it is my opinion that they are not either individually or collectively creditors," he wrote Monday in an email to The Associated Press.

Monday's deadline is just one of several steps that could lead to federal Judge Steven Rhodes allowing Detroit into bankruptcy protection while it restructures.

Some bankruptcy experts say it can be difficult for objections to stop a bankruptcy, but they have proved successful in a few cases. Boise County, Idaho, failed to go into bankruptcy after objections that the county was not insolvent. Harrisburg, Pa., failed the garner protection because its bankruptcy filing was not authorized by state law.

The city has until Sept. 6 to file its responses to any objections by creditors. A multi-day hearing on the eligibility question is scheduled to start Oct. 23.

"Objecting creditors are individual parties in interest in the Chapter 9 bankrupt estate," McTevia wrote. "It is doubtful that the judge will render a blanket ruling either accepting or rejecting all objections."

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