What is the legal, political, and financial fallout of Detroit’s highly publicized Chapter 9 bankruptcy? That was the central question in a Nov. 7 panel discussion in St. Louis hosted by Thompson Coburn. Below are the issues discussed by Thompson Coburn attorneys, and leaders from St. Louis’ business and financial communities.
The recentfiling by the City of Detroit for bankruptcy—the largest such municipal filing in history—has brought with it an unexpected art law twist. Namely: to what extent can, or should the collection of the Detroit Institute of Arts be used to satisfy the city’s creditors. As one might expect, the differences between what the city can do, what it should do
An important qualifier to the discussion about deaccessioning and the Detroit Institute of Arts is that although DIA is a subdivision of the bankruptcy debtor (Detroit), that debtor is not any old commercial entity. Rather, Detroit is a municipality, and municipal and state debtors are governed by slightly different rules than private parties.
On the afternoon of July 18, 2013, the City of Detroit filed its highly anticipated petition for relief under Chapter 9 of the Bankruptcy Code in the Bankruptcy Court for the Eastern District of Michigan. This marks the largest municipal bankruptcy filing in United States history.1As a result of the Chapter 9 filing, all actions by creditors to collect prepetition claims against the City are enjoined through the imposition of an automatic stay, except for the application of special revenues pledged to indebtedness.
The City of Detroit filed for protection under chapter 9 of the Bankruptcy Code on July 18, 2013,1 becoming the largest municipality to ever file for bankruptcy. Detroit’s bankruptcy filing presents numerous complicated issues, which will be resolved over the course of the case.
Everyone gathered last week at the meeting convened by Detroit Emergency Manager Kevyn Orr knew that the news would be dire. Nonetheless, Orr’s report on Detroit’s financial condition and his proposal for the treatment of the city’s creditors – an offer of approximately ten cents on the dollar for the city’s unsecured bonds - still managed to drop jaws. Therein lies
Nearly nine months after it filed for protection under Chapter 9 of the Bankruptcy Code, a federal bankruptcy judge last week determined that the city of Stockton, California has satisfied the requirements of Section 109(c) of the Bankruptcy Code a
In June, 2012, Stockton California filed a bankruptcy case under chapter 9. While businesses and individuals are entitled to file bankruptcy petitions without bankruptcy court approval, the same is not true for municipalities. They can only be debtors if, among other things, the majority of their creditors agree; they negotiate in good faith and fail to obtain majority agreement; negotiation is impracticable; or a creditor is attempting to obtain a voidable preference. In addition, the bankruptcy court can dismiss a municipality’s petition if it was not filed in “good fait
Under prior law, a municipality could file a petition and prosecute to completion bankruptcy proceedings under federal law, subject to certain requirements.
This is a follow up to our recent blog post discussing then pending Michigan legislation known as the “Local Financial Stability and Choice Act” or Public Act 436 (the “Financial Stability Act”), which will replace Public Act 72 and overhaul Michigan’s emergency manager law. On December 27, 2012, Michigan Gov. Rick Snyder signed the Financial Stability Act into law.