Wednesday, July 31, 2013
A Speedy Bankruptcy for Detroit?
The U.S. Bankruptcy judge overseeing the city of Detroit's bankruptcy filing has proposed an October trial date and a deadline of March 1, 1014 for the city to file its reorganization plan.
In the October hearing, the court will hear objections to the eligibility of Detroit to file bankruptcy. If allowed, Detroit’s bankruptcy will be the largest Chapter 9 bankruptcy in U.S. history. Under the court’s proposed schedule, creditors will have until August 19 to file their objections to Detroit’s bankruptcy case.
Detroit will need to prove in October that it cannot pay its debts and has made a good-faith effort to negotiate with its creditors or that there are simply too many creditors to reasonably negotiate with.
Tight deadlines would help Detroit move through the bankruptcy process more quickly. It took Stockton, California, almost a year to get through the eligibility portion of the proceedings. With over $18 billion in liabilities for Detroit, a quick proceeding could get the city back on its feet a little sooner.