Extra Litigation Costly, may delay Detroit Bankruptcy
Detroit has been reeling since filing for Chapter 9 bankruptcy in 2013. Emergency City Manager Kevin Orr recently went on record to say the deal made with creditor Syncora Inc. last month saved the city millions in court costs and stopped a delay that no doubt would have gone on for months if not years. At the start of last September, Detroit was able to come to terms with a deal with bond insurer Syncora Inc. to settle the $400 million debt. The deal made with Syncora Inc. includes long-term leases on a parking garage and tunnel between Detroit and Canada as well as cash.
Syncora Inc. had been one of Detroit’s most contentious creditors, “They filed litigation to just about everything we were trying to do through the course of the bankruptcy,” Orr said while under testimony, “It was costing the city not an insignificant sum of money to defend the city from those litigations. We anticipated it was going to be over $5 million to $10 million.” Orr was questioned about a variety of things while under testimony this past week, including his poor track record collecting taxes. Orr responded saying the city was collecting around 50% of its property taxes, but stressed the importance of caution.
Detroit’s population is currently around the 685,000 mark, and teetering. The economy around the city is suffering, and homeowners have complained about over taxation. Many found that it was cheaper to walk away from their heavily taxed homes, than to pay what is owed to the city; because of this Orr stressed the importance of not taxing too much.
“Do you want the city to be 500,000? Do people want the city to be 350,000?”, “It can’t happen.” Orr warned when talking about the population of the windy city.