Detroit’s bankruptcy is producing thousands of losers, and a small group of winners — the professionals charged with carrying out the orders of the city’s emergency manager. The array of financially troubled cities in Michigan also make the state a potentially huge new market for municipal bankruptcies, and a deep pool for the extravagant fees generated from refinancing decades of industrial decline.
Detroit’s bankruptcy trial is scheduled to start Tuesday, September 2, in U.S. Bankruptcy Judge Steven Rhodes’ courtroom at the U.S. District Bankruptcy Court for the Eastern District of Michigan. Over the next eight weeks or so, the trial proceedings are expected to reveal just how much “better off” the big banks financing the city’s new debt and financial obligations — as well the lawyers, bankers, accountants, and consultants involved in the deal-making — will be from rearranging Detroit’s fiscal operations. An examination by Circle of Blue of the reports, exhibits, studies, and court orders filed with the federal bankruptcy court yields a disturbing and unassailable conclusion: While unionized employees lost jobs and substantial portions of their pensions and benefits, and thousands of Detroit’s poorest residents are severed from water supplies and sewer services, the nation’s biggest banks are making $6 billion to $7 billion in new bonds available to refinance city debts, a move that should reduce interest payments.
See the full article by Keith Schneider here: http://www.circleofblue.org/waternews/2014/world/detroit-water-shutoffs-resume-bankruptcy-lawyers-banks-cash/