On June 16, Kevyn Orr, emergency manager for the city of Detroit, sent a letter to Michigan Governor Richard Snyder recommending that the municipality file for Chapter 9 bankruptcy protection. The historic center of Americas automobile industry, Detroit could no longer withstand its protracted decline. Snyder appointed Orr a noted bankruptcy lawyer who had represented local carmaker Chrysler Group in its 2009 restructuring in March after a committee that the governor had established to review the citys dire finances proposed hiring an emergency manager. The committee found that Detroits pension deficit was $3.5 billion, much higher than previously thought. Labor representatives and pension beneficiaries disputed both the figure and the citys Chapter 9 filing, made two days after Orrs letter. The emergency manager cited the size of the deficit as a big reason Michigan should seek to reorder Detroit through the bankruptcy code. (In late October, Judge Steven Rhodes of the U.S. Bankruptcy Court for the Eastern District of Michigan was deciding Detroits eligibility for bankruptcy.) Orr, 54, who grew up in Florida and earned a JD from the University of Michigan, has sought to have the citys pension beneficiaries treated like regular creditors, making it more likely that theyll end up with less. Hes also trying to reorganize Detroits public pension funds: In September he unveiled a proposal to freeze benefits for existing employees and move new beneficiaries to a 401(k) system.
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