Will Detroit bankruptcy affect Detroit GP?
Its financial picture is so bleak, the City of Detroit may not have the means to fix itself without landing in bankruptcy court, restructuring experts say.
|Detroit Mayor Dave Bing is fighting a losing battle with unemployment so high in his city|
Mayor Dave Bing and city officials insist they can find solutions to fend off a financial meltdown, even as the state begins its review of Detroit's finances Tuesday.
But experts who reviewed the city's finances for the Free Press said that even an emergency manager -- despite sweeping powers to slash costs, abolish union contracts and sell off assets -- will likely find the challenges too great to solve without the help of a bankruptcy judge.
The city's long-term debts and obligations to retirees.
An emergency manager, who would be appointed by Gov. Rick Snyder if the state finds that city's financial crisis warrants it, has limited power in dealing with those kinds of costs.
"This is a very difficult situation," said Charles Moore, a senior managing director for Conway MacKenzie, a Birmingham-based 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."
This week, the state begins to comb through Detroit's troubled finances to determine whether there's a need for an emergency manager.
The state's largest city is within four months of running out of cash to pay for services as vital as police patrols and bus rides. The spiraling costs of pension and health care benefits, combined with the relentless decline of income and property taxes, could further erode services in the city. More at Detroit Free Press