Detroit headed for bankruptcy?

Dec. 4, 2011 at 5:49 PM
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DETROIT, Dec. 4 (UPI) -- Detroit's financial outlook is so dire the city may not be able to right itself without ending up in bankruptcy court, restructuring experts say.

Despite Mayor Dave Bing and city officials assurances they can avert a final financial meltdown, restructuring experts said even if an emergency manager was brought in with powers to abolish union contracts, slash costs and sell off assets, the only ending for the city is bankruptcy court, the Detroit Free Press reported Sunday.

Two of the obstacles in the way of solvency for an emergency manager to be appointed by Michigan Gov. Rick Snyder are the city's obligation to retirees and its long-term debts, the newspaper said. One expert sees the problem this way.

"This is a very difficult situation," said Charles Moore, a senior managing director for Conway MacKenzie, a turnaround and restructuring firm that has helped reorganize municipalities and school districts. "If the city is not able to fix the shortfall and an emergency manager is appointed and cannot fix things, the city with its debt load would be a good candidate for bankruptcy."

An emergency manager has the responsibility of deciding what stays and what goes when selling assets, cutting costs and abolishing contracts, but they all come at a human cost, one union said.

"Taking money from our budget will endanger the public," said Dan McNamara, president of the Detroit Fire Fighters Association. "We've made enough sacrifices."

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