The Herald Bulletin

Morning Update

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October 23, 2013

Trial starts; Is Detroit eligible for bankruptcy?

(Continued)

DETROIT —

Sharon Levine of the American Federation of State, County and Municipal Employees said talks between Detroit and its unions should have lasted months not weeks. Another lawyer, Babette Ceccotti with the United Auto Workers, said the bankruptcy filing was aimed at using federal law to attack pensions, which otherwise are protected under the Michigan Constitution.

"Chapter 9 was already a forgone conclusion" before the city last met with creditors a week before the filing, Green said.

Bennett, however, said emergency manager Kevyn Orr's team was cooperative and open to suggestions.

"The city created a data base, populated it with enormous amounts of information and did not withhold information to get an edge," he said. "The city did act in good faith in all of the negotiations. The negotiations were unsuccessful."

The first and only witness Wednesday was Gaurav Malhotra, an analyst from Ernst & Young. He said he warned Orr last summer that Detroit likely was facing a 10-year budget deficit of $3.9 billion, mainly due to pensions and health care costs.

Detroit is being run by Orr, a bankruptcy specialist who was appointed in March by Gov. Rick Snyder. They will be trial witnesses, along with Police Chief James Craig and outside financial consultants.

Michigan's emergency manager law gives Orr wide discretion to operate the city, from hiring people to deciding how services are delivered. Many local elected officials, including Mayor Dave Bing, are on the sideline and have no role in the trial.

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