Detroit Judge to Consider Debt Crisis Veteran as AdviserSteven Church
Detroit’s bankruptcy judge will interview five candidates so he can choose one to help decide whether the city’s debt-adjustment plan is viable, including Richard Ravitch, who helped New York City resolve its fiscal crisis in the 1970s.
U.S. Bankruptcy Judge Steven Rhodes is scheduled to oversee a court battle in July between the city and creditors owed $18 billion over the proposal to cut municipal debt.
The other adviser candidates are Dean Kaplan of PFM Group Ltd., Peter J. Hammer, a professor at Wayne State University Law School, William A. Brandt Jr. of Development Specialists Inc. and Martha Kopacz with Phoenix Management Services LLC.
Rhodes told creditors at a hearing this month that he expects them to focus on whether Detroit can do more to pay them, leaving the question of the debt-adjustment plan’s long-term viability unaddressed.
“Everyone is watching everything we do here,” Rhodes told lawyers at the hearing.
Detroit filed for bankruptcy in July and has been negotiating behind closed doors on some issues and fighting in court on others with creditors, including retired city employees, unions and bond insurers on the hook for investor losses.
Detroit claims the bankruptcy, the biggest by a U.S. municipality, was necessary because it can’t afford to pay its debts in full and provide minimum levels of service, such as police and fire protection.
Ravitch, 80, is a former lieutenant governor of New York. In the 1970s when New York City was on the brink of insolvency, he helped create a plan to refinance $14 billion of city debt.
The case is In re City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).