Rhodes agreed with unions and pension funds that the city’s emergency manager, Kevyn Orr, had not negotiated in good faith in the weeks ahead of the July filing, a key condition under federal law.
But he said the number of creditors – more than 100,000 – and a wide array of competing interests probably made that ‘impossible.’
Detroit ‘could have and should have filed for bankruptcy long before it did. Perhaps years,’ the judge said.
The decision set the stage for officials to confront $18 billion in debt with a plan that might pay creditors just pennies on the dollar and is sure to include touchy negotiations over the pensions of about 23,000 retirees and 9,000 workers. Orr says pension funds are short by $3.5 billion.
Rhodes promised that he would not ‘lightly or casually’ sign off on just any cuts.
The city has argued that bankruptcy protection will allow it to help beleaguered residents who for years have tolerated slow police responses, darkened streetlights and erratic garbage pickup – a concern mentioned by the judge during a nine-day trial that ended Nov. 8.