Bankruptcy lawyer Kevyn Orr has been officially named as Detroit’s emergency financial manager. Michigan Governor Rick Snyder had selected him for the job to save the city from the brink of bankruptcy based on his success at reorganizing Chrysler Group LLC. Snyder had publicly presented Orr, a graduate of the University of Michigan, at a news briefing. In 2009, Chrysler was assisted by the Jones Day partner to win $4.96 billion required to restructure and streamline operations by removing 789 dealers. In an interview, Spencer Overton, a law professor at George Washington University, expressed confidence in Orr, saying that that Detroit is finally getting “a great break.”
Orr, who is now 54 years old, has a formidable task ahead of him as Detroit has racked up a deficit of nearly $327 million last year and has incurred $14 billion in long-term obligations. City residents have been complaining about the worsening gaps in services. Meanwhile, the season for heated union talks are almost at hand. This is not very different from the situation that he dealt with in 2009 when he took the reins in Chrysler, which reported losses of nearly $3.8 billion.
With the support of the U.S. government, Chrysler underwent a bankruptcy wherein it emerged with giving Fiat SpA control of Chrysler’s assets while what remained was liquidated. Last year, Chrysler posted a net income of $1.67 billion, from $183 million in 2011. Orr told reporters that handling Detroit won’t be the same as fixing an automaker but he said that he will be using what he learned from the experience. He resigned from Jones Day to get the job in Michigan. Orr believes that his work in Detroit will be completed within just 18 months.