Kevyn Orr, the appointed emergency financial manager for the near-bankrupt city of Detroit, has submitted his first report to Michigan Governor Rick Snyder, outlining things that may be done to save it from financial collapse. Orr has imposed on himself a six-week deadline to determine whether Detroit can breeze through its financial crisis without having to file for bankruptcy.
Orr’s things-that-maybe-done list includes bond restructurings and negotiated settlements with bondholders and bond insurers, as well as tough discussions with unionized workers. Orr, however, has yet to inform unions, bond insurance firms and others on the full extent that they would be affected by the city’s financial fix. Orr's spokesman Bill Nowling remarked that the emergency manager expects to decide soon whether discussions with affected parties will yield good results.
Nowling said that it is “safe to say” that they have a good idea of whether they can reach an out-of-court restructuring with the city’s bondholders, pensioners, retirees and city employees within six weeks, adding that this will not be a prolonged process. Detroit was once a symbol of industrial might in the United States.
Now, the city serves as a case study of the problems that many US cities and states are living with as they struggle against huge debts and unsustainable obligations. The preliminary steps being taken to save the city from financial collapse is similar to those made between carmakers General Motors and Chrysler and their creditors and workers. Interestingly, Orr represented Chrysler during its restructuring.