Since filing for bankruptcy three months ago, a lawyer said Detroit has the evidence needed to show the city, the largest to ever file for bankruptcy in U.S. history, is unable to pay debts owed and should be granted the opportunity to "turn itself around," the Associated Press reported.
In order for Detroit to be granted Chapter 9 bankruptcy, the city must show they've taken the necessary steps to be eligible to restructure about $18 billion in debt, the AP reported. The city will need to prove they tried to make negotiations with creditors before they filed for bankruptcy in July, the AP reported. Union and pension funds argue that Detroit did not meet that requirement.
During his opening remarks in bankruptcy court on Wednesday, city attorney Bruce Bennett said "he could stand there for hours describing Detroits ruinous finances," according to the AP.
Bankruptcy expert in Chicago, Jim Spiotto, challenged Bennett's claims.
"They're not paying their debts," Spiotto told AP. "Look at their blighted areas. Look at their services."
Pension funds and unions are still challenging the bankruptcy and claim Kevyn Orr, Detroit's emergency manager who gained control over the city finances after he was appointed by Michigan Gov. Rick Snyder, did not genuinely negotiate when he met with creditors in July, according to the AP. Orr insists pension funds are short $3.5 billion and health coverage also needs to be overhauled.
Babette Ceccotti who is an attorney for the United Auto Workers said in a court filing that evidence will show Orr had already planned to file bankruptcy before meeting with creditors, and that the "negotiations" were just a necessary step "on the way to the courthouse," the AP reported.
If Judge Steve Rhodes, who is handling the case, grants Detroit bankruptcy, the case would then become how to solve the problem with the $18 billion debt, according to the AP. Before making any decisions, Judge Rhodes will hear witness testimony, the presentation of evidence and oral arguments.
"It's a crucial point in the case," lawyer Chuck Tatelbaum, a bankruptcy expert in Fort Lauderdale, Fla. told the AP. "There will be others, but this is the go or no-go. ... If there was ever a poster child for what Congress decided when they enacted Chapter 9, it's for a city like this."
