Bankruptcy

Investment banker brings drama to Detroit bankruptcy fight

An investment banker working on restructuring city finances testified today about Detroit’s dire condition and unsuccessful attempts to negotiate with creditors and avoid filing Chapter 9 bankruptcy.

Banker Kenneth Buckfire injected a bit of drama and broke up hours of minute financial data from the first two witnesses in a trial that will determine whether Detroit is eligible for bankruptcy relief.

Buckfire’s testimony continues at 9 a.m. Friday. Following cross examination, Detroit Police Chief James Craig and Emergency Manager Kevyn Orr will follow Buckfire to the witness stand and wrap up the city’s case.

Updates have ended

View our archived coverage of Investment banker brings drama to Detroit bankruptcy fight.

City of Detroit Water and Sewerage Department Wastewater Treatment Plant on Jefferson in Detroit, Michigan on June 13, 2013.

City of Detroit Water and Sewerage Department Wastewater Treatment Plant on Jefferson in Detroit, Michigan on June 13, 2013.

Water and sewer bondholders who were guaranteed to receive 100 cents on the dollar amid the Detroit financial crisis were mad about plans to spin off the water department to a regional group, a witness said.

Investment banker Kenneth Buckfire offered rare insight into private talks between the city and bondholders, who were approached to make concessions that could have spared Detroit from filing bankruptcy earlier this year.

Kevyn Orr

Kevyn Orr

In June, the city proposed spinning off the department to a new regional authority that would be able to borrow money at a lower rate. The plan was a major pillar of Emergency Manager Kevyn Orr’s restructuring plan, a last-ditch effort to avoid bankruptcy.

Buckfire pointed to the bondholders’ reaction as the city’s bankruptcy team tried to prove that Detroit is eligible for bankruptcy relief because it negotiated in good faith with creditors.

“Speaking with bondholders, nobody was willing to consider any compromise of their claims, whatsoever,” Buckfire said.

Secured bondholders were very unhappy, he said.

“Even though we would give them a 100-cent recovery, it would not have been at the old interest rates, which were double the costs,” Buckfire said. “They didn’t like it.

“I was not surprised, but I hoped at least they would counter with something else,” he said.

Photo of High Lift Building of the Detroit Water and Sewerage Department at 10100 East Jefferson Avenue in Detroit in June.

Photo of High Lift Building of the Detroit
Water and Sewerage Department at 10100 East Jefferson Avenue in Detroit in June.

Several private equity firms have inquired about buying the Detroit Water and Sewerage Department, but only if they can hike rates charged to customers across Metro Detroit, according to testimony.

Investment banker Kenneth Buckfire made the disclosure while talking about efforts by Emergency Manager Kevyn Orr’s restructuring team to make money off various assets, including Belle Isle, the water department and Detroit Institute of Arts.

The water department operates on zero profit and the city is unable to  raise rates to generate cash that could ease the city’s financial crisis, Buckfire testified.

“The only way is to sell it or” privatize it,” he testified. “Several private equity firms have expressed interest, but only if they can charge higher rates.”Orr has announced plans to spin off the department to a regional authority.

The water department has the highest potential value among city assets, aside from the Detroit Institute of Arts collection. A valuation is due at the end of the month from Christie’s Appraisals, the New York-based international auction house.

The Coleman A. Young Municipal Airport is “worth nothing” without massive investment, he said. Joe Louis Arena is obsolete and there has been no interest among potential buyers.

The city is putting together an auction for the right to use nine parking garages, but many need significant repairs, he said.

Detroit skyline on Oct. 1.

Detroit skyline on Oct. 1.

Detroit was unable to pay bills in May and was operating on a ‘razor’s edge’ after mortgaging all of its major assets and almost running out of cash, a restructuring expert testified.

Investment banker and restructuring consultant Kenneth Buckfire testified about the weeks leading up to the city’s historic bankruptcy filing July 18. He was testifying as a witness for the city, which is trying to convince U.S. Bankruptcy Judge Steven Rhodes that the city is insolvent and eligible for Chapter 9 bankruptcy relief.

“The city was operating on a razor’s edge in terms of liquidity,” Buckfire testified. We were in constant communication with the city’s finance staff, who told us they were stretching out payables to conserve cash. They were not paying trade creditors.”

“In your view, as of May, was the city able to pay its debts as they came due?” asked the city’s bankruptcy lawyer Thomas Cullen Jr.

“No. The city was continuing to stretch things out whenever possible to conserve cash,” Buckfire testified.

Detroit needed about $100 million in cash to operate for six months to a year, he said.

“Did the city have that?” Cullen asked.

“No,” Buckfire said.

Greektown Casino and Greektown Casino-Hotel on Thursday 8.6.09.

Greektown Casino and Greektown Casino-Hotel on Thursday 8.6.09.

The threat of losing access to $180 million a year in casino cash in January raised the risk of Detroit filing the biggest municipal bankruptcy case in U.S. history, an investment banker testified.

Banker Kenneth Buckfire, who was working to restructure the city’s finances, testified about the threat of a default related to a complicated interest rate swap transaction.

The roulette wheel spins in the "superpit" area at the Greektown Casino in Detroit on September 14, 2011.

The roulette wheel spins in the “superpit” area at the Greektown Casino in Detroit on September 14, 2011.

He provided the most stark assessment of the city’s finances during two days of testimony aimed at proving Detroit was insolvent and eligible for bankruptcy relief. His testimony emphasized the downward spiral of the nation’s iconic industrial town and how after decades of decline it had come to rely heavily on casino revenue. He called the cash generated by losing bets placed on poker and slot machines the city’s “highest quality” revenue.

The default would block the city’s access to $180 million in revenue from three casinos, which Buckfire called the city’s best revenue stream after a decades-long financial decline.

“I was very concerned about the default threat that, at any time, the swap parties could block the city’s access to gaming revenues, which was, and still is, the highest quality revenue the city has,” Buckfire testified.

The potential default made bankruptcy a real threat, he testified.

“A lack of cash is what normally pushes a company into Chapter 7″ bankruptcy, Buckfire testified.

Chapter 7 is not available to a municipality, however. Municipalities can be eligible for Chapter 9 bankruptcy relief.

“It is a necessary way of protecting the city,” Buckfire said. “In January, that was our primary concern. The swap banks could deprive us of access to the casino revenue and cause the city incredible damage and we would have had to make massive cutbacks to services.”

A 12-month cash-flow forecast in early May showed a dire future and raised fear city services could stop, Buckfire said.

“The city’s cash position was far worse than I ever feared,” he testified. “I feared that the city would be operating with no cash. I was very alarmed.”

Detroit failed to reach “many of the milestones” by late fall 2012 outlined in a consent agreement that was connected to $137 million in state financing, an investment banker testified today.

Investment banker Kenneth Buckfire outlined the city’s mixed track record under a consent agreement that, if successful, could have avoided Detroit filing the biggest municipal bankruptcy in U.S. history.

“Did you come to an understanding of the degree to which the agreements had been a success in promoting or helping the city to achieve the identified reforms?” the city’s bankruptcy lawyer Thomas Cullen Jr. asked.

Lawyer Thomas Cullen Jr.

Lawyer Thomas Cullen Jr.

“Yes,” Buckfire said.

“What was your view?” Cullen asked.

“It had been a very mixed outcome,” Buckfire said. “The city had been successful in delivering, really, for the first time, financial information on a monthly basis. But it had very, very limited success implementing any of the other objectives.”

Failure prevented the city from receiving additional money held in an escrow account, Buckfire said.

“Had the city made substantial progress?” Cullen asked.

“No,” Buckfire said.

“Why do you say that?” Cullen asked.

“Because it hadn’t,” Buckfire said. “It failed to address any of the major items, in particular, the restoration of public safety. Considerably nothing had happened.”

Kenneth Buckfire

Kenneth Buckfire

The city’s investment banker who spearheaded restructuring talks took the stand as the third witness in the Detroit bankruptcy eligibility trial.

Kenneth Buckfire is co-president and managing director of New York City- based Miller Buckfire. He could be asked to chronicle a proposed deal that would let the city access monthly casino tax revenues to finance operations during bankruptcy.

From earlier:

Buckfire could discuss a complicated interest rate swap transaction with two big banks that he wants to terminate in order to access $11 million in monthly wagering taxes that are currently tied up in debt payments.

Emergency Manager Kevyn Orr wants to spend $1.25 billion over 10 years from the proposed settlement to replace equipment and vehicles for first responders and tame a city plagued by one of the highest crime rates in the country.

The city wants U.S. Bankruptcy Judge Steven Rhodes to approve the proposed settlement. It would pay UBS and Bank of America 75 to 82 cents on the dollar through $4 million monthly in casino revenues and a $250 million termination fee to end the swaps, which soured on Detroit when interest rates plummeted during the recession.

To come up with the $250 million termination fee, has secured a debtor-in-possession loan of $350 million and pledged the presumed casino revenue to finance the new debt, assuming the judge approves the settlement. The remaining $100 million would go for what Orr calls “quality of life” improvements in the city.

Emergency Manager Kevyn Orr shakes hands with Detroit Police and Fire pension Chairman George Orzech, left, during creditors meeting at Detroit Metropolitan Airport in June.

Emergency Manager Kevyn Orr shakes hands with Detroit Police and Fire pension Chairman George Orzech, left, during creditors meeting at Detroit Metropolitan Airport in June.

A turnaround consultant denied that Emergency Manager Kevyn Orr’s plan to restructure the city’s finances and reinvest $1.25 billion in city services would be accomplished by slashing retiree pensions and health care benefits.

The denial came during cross examination of consultant Charles Moore of turnaround firm Conway MacKenzie.

UAW lawyer Thomas Ciantra

UAW lawyer Thomas Ciantra

“Isn’t the source of funding for the reinvestment that the city would like to undertake is bascially going to come from a reduction in legacy costs — bond debt and accrued pension and other post-retirement benefits?” United Auto Workers lawyer Thomas Ciantra asked.

“No,” Moore said.

Orr unveiled his 10-year restructuring plan in June. He proposed reinvesting $1.25 billion on a fix-it plan for the city.

At the time, Orr said the money would come from concessions from creditors, a series of restructuring moves like spinning off the Detroit Department of Water and Sewerage and some state funding.

From The News coverage at the time:

Police, fire and EMS

Orr wants to reduce response times to national averages, improve investigation closure rates update, overhaul department vehicles and facilities and comply with federal consent decrees governing the use of force and jailing issues.

He wants to outsource crime analysis, have local schools train recruits and make civilians do more administrative work. The police could share resources with other departments and consolidate precinct lockups into a centralized jail, while Orr will pursue “opportunities to combine fire and/or EMS services with other local municipalities.”

Over the next decade, Orr said he wants to spend $102.6 million on police vehicles, $19 million on fire vehicles, $2 million repairing engine houses and $18 million to build six police precincts.

Photo of blight along Leander Street near City Airport in Detroit on July 4.

Photo of blight along Leander Street near City Airport in Detroit on July 4.

Blight

Orr wants to spend $500 million over the next six years on housing demolitions, brush removal, recycling centers and other blight-fighting initiatives. He’s also exploring ordinance changes to speed the demolition process, while employing public-safety data to prioritize tear-downs.

The Detroit News has reported that Orr may change city laws to allow demolition crews to leave most basement walls and floors, shaving up to $2,500 of the $8,500 cost.

Water

Orr’s plan is to strip the name “Detroit” from the city’s water department, transfer assets to a regional authority and refinance the utility’s debt are seen as moves that could save almost $1 billion.

By transferring the Metropolitan Area Water and Sewer Authority to a regional group, Orr said Detroit could collect revenue from communities that use the city’s water and sewer system and spend it on public safety or other services.

Lights

Orr wants to transfer operations to the newly created Public Lighting Authority and reduce the number of streetlights — 46,000 to 55,000 from 88,000. About half don’t work now. The plan includes decommissioning the idle Mistersky Power Plant.

Transportation

Orr wants to transfer the Detroit Department of Transportation into the new Regional Transit Authority, raise fares, reduce overtime or outsource operations. He also proposes spending $20.8 million over four years on facility improvements.

Garbage

The city will seek bids to outsource garbage collection. Two firms, Waste Management and Republic, are expected to bid.

Parking

Orr wants to outsource parking operations and then close the department. The deals would pay down $10 million in parking debt.

The Detroit bankruptcy trial continued after a lunch break with consultant Charles Moore of turnaround firm Conway MacKenzie testifying today about a decline in city services after decades of financial problems.

Moore is testifying for the city’s bankruptcy team, which has focused the early stage of the trial on proving the city is insolvent and had failed to provide essential city services, including police and fire protection.

Moore played a key role in helping Emergency Manager Kevyn Orr craft a turnaround plan given to creditors June 14. The proposal outlined the depths of the city’s financial crisis and alleged that the city’s pension funds had an estimated shortfall of approximately $3.5 billion.

The pension funds dispute the estimate, which Orr has repeatedly cited as a major factor that contributed to the city’s bankruptcy.

Detroit Mayor Dave Bing announced the demolition of the Brewster-Dougglass housing project. The housing complex has been closed for over a decade and the tear-down will begin at the end of 2012. Ten months later, the complex is still standing.

Detroit Mayor Dave Bing announced the demolition of the Brewster-Dougglass housing project. The housing complex has been closed for over a decade and the tear-down will begin at the end of 2012. Ten months later, demolition is underway but the complex is still standing.

Numerous city departments were severely broken after waves of cost-cutting that ended in Detroit’s Chapter 9 bankruptcy filing, a turnaround guru testified today.

Consultant Charles Moore of turnaround firm Conway MacKenzie talked about his work trying to turnaround various departments, including police, fire, EMS, lighting and transportation.

He was being questioned by city lawyer Geoff Stewart, who is trying to illustrate how the city failed to provide basic services to residents before the bankruptcy filing July 18.

Geoff Stewart

Geoff Stewart

“We found a number of departments that were severely broken,” Moore testified. “As a result of cost cuts, many departments couldn’t provide the most basic functions and had an inability to get property tax bills out.”

Moore played a key role in Emergency Manager Kevyn Orr’s 10-year restructuring plan that was given to creditors in June.

The plan calls for reinvesting $1.25 billion in public safety, fighting blight and spinning off the Detroit Water and Sewerage Department.

The plan is contingent on the city becoming eligible for Chapter 9 bankruptcy relief.

Charles Moore

Charles Moore

The city just called Charles Moore, a senior managing director with the city’s restructuring firm, Birmingham-based Conway MacKenzie, to the witness stand.

He is expected to testify about the financial health of the city’s pension funds, a gap in funding and the role legacy liabilities played in the city’s bankruptcy filing.

From earlier in the blog:

He has spent months chronicling the alleged decades-long mismanagement of the city’s pension funds. He already has alleged pension trustees weakened the city’s retirement funds by using hundreds of millions of dollars on savings plans for active workers and doling out annual bonus checks.

City lawyers have said the practices depleted the pension funds of $1.9 billion in investment value over two decades and contributed to an estimated $3.5 billion in unfunded liability.

Union lawyers are fighting to prevent Moore from testifying about the estimated $3.5 billion figure. Moore is not an expert witness, the UAW and AFSCME argued today.

“This type of testimony involves extremely specialized knowledge,” AFSCME lawyer Jack Sherwood told the judge.

Moore can address the estimated shortfall as evidence in a challenge to Emergency Manager Kevyn Orr’s credibility, the judge ruled.

Kevyn Orr

Kevyn Orr

Emergency Manager Kevyn Orr dispatched underlings to meet with city unions and pension funds who were not authorized to negotiate concessions with key Detroit creditors before the city filed bankruptcy, according to testimony today.

UAW lawyer Peter DeChiara questioned financial consultant Gaurav Malhotra about a series of meetings between June 14 and July 18,  the day Detroit filed the biggest municipal bankruptcy in U.S. history. Malhotra works with Orr and has spent months analyzing the city’s finances.

The exchange happened as DeChiara tried to convince U.S. Bankruptcy Judge Steven Rhodes that the city is ineligible for Chapter 9 bankruptcy relief because Detroit failed to negotiate with creditors in good faith.

“You’re not an officer of Detroit, correct?” DeChiara asked.

“Correct,” Malhotra said.

“You don’t hold any elected or appointed posistion with the city, correct?” the lawyer asked.

“Correct,” Malhotra said.

UAW lawyer Peter DeChiara

UAW lawyer Peter DeChiara

“Did you have the authority to negotiate for the city?” DeChiara asked.

No, the consultant said.

“Do you have any knowledge if other advisers attending on behalf of the city had the authority to negotiate?” DeChiara asked.

“I can’t say,” Malhotra said.

U.S. Bankruptcy Judge Steven Rhodes is not likely to rule whether Detroit is eligible for Chapter 9 bankruptcy relief until at least Nov. 13.

Rhodes filed a notice in court today inviting the city and creditors to file briefs about good faith negotiations. The briefs are due Nov. 13.

The city must prove that it negotiated in good faith with creditors before filing bankruptcy July 18.  An eligibility trial is scheduled to run through Tuesday, at least.

The eligibility trial has become bogged down in its second day. So far, the city has called only one witness, who was facing cross examination by a union lawyer late this morning.

The city plans to call four more witnesses, including Emergency Manager Kevyn Orr.

Mark Smola, of Macomb Twp., and his wife Donna at the famed work by Mexican muralist Diego Rivera in July, the couple spoke about the vast art collection at the Detroit Institute of Arts and how the bankruptcy filing by the City of Detroit will effect the museum's future.

Mark Smola, of Macomb Twp., and his wife Donna at the famed work by Mexican muralist Diego Rivera in July at the Detroit Institute of Arts.

The city’s largest union pressed a financial consultant on the failure to sell any city assets to shore up Detroit’s budget, pay creditors and avoid filing bankruptcy.

Jack Sherwood, a lawyer for the American Federation of State, County & Municipal Employees wanted to know whether there was a reluctance to sell assets — including the Detroit Institute of Arts collection — because the money would hurt Detroit’s chances of proving it is insolvent and render the city ineligible for Chapter 9 bankruptcy relief.

Sherwood was cross-examining Ernst & Young consultant Gaurav Malhotra about his work as an outside consultant working for the city along with investment banker Miller Buckfire.

“Was Miller Buckfire concerned that asset monetization in March 2013 would have a negative impact on the city of Detroit’s ability to prove that it was eligible for Chapter 9 bankruptcy?” Sherwood asked.

“I can’t answer the question whether they were or not,” Malhotra said.

“Did Miller Buckfire say anything to you or in your presence or suggest that they wree concerned if the city monetized assets in 2013…that that would have a negative impact on the city of Detroit’s ability to prove that it was eligible for Chapter 9?” Sherwood asked.

“I do not recall a conversation like that,” Malhotra said.

“Did Miller Buckfire express any opposition…to strategies that called for a short-term monetization of assets in early 2013?” the lawyer asked.

“I do not recall,” Malhotra said.

Malhotra took a dim view of selling city asssets, arguing that sales would not change the city’s structural financial problems.

“But if you sell assets that generate cash, you will have more cash,” Malhotra said.

“And you can use that cash to satisfy liabilities,” Sherwood said.

“Cash is cash,” Malhotra said. “If you have more cash, you have more cash.”

In February, as the city’s finances nosedived, the administration and City Council tried to shore up the budget by deferring bills instead of making long-term structural changes, a financial consultant testified.

AFSCME lawyer Jack Sherwood

AFSCME lawyer Jack Sherwood

Under cross examination Thursday, Gaurav Malhotra narrated the months leading up to the city’s July bankruptcy filing and failed steps taken by the city to reverse a financial crisis that in February included $14.9 billion in long-term debt.

“In February 2013, did you believe a satisfactory plan existed to address the cash crisis?” asked Jack Sherwood, a lawyer for the city’s biggest union, the American Federation of State, County and Municipal Employees.

“What a satisfactory plan means is subjective,” Malhotra said. “We had a lot of meetings with city officials to see how to preserve cash over the next few months. What the city could impact in terms of permanent cost reductions, those options were very limited. The majority of any savings would come from deferral of either pension-related costs or additional health-care related costs.”

The union is trying to prove that the city had achieved $150 million in savings — a move that suggests additional concessions could have been reached, and bankruptcy avoided, if Emergency Manager Kevyn Orr had engaged creditors in good-faith negotiations.

The union, along with other creditors, is trying to convince U.S. Bankruptcy Judge Steven Rhodes that Orr failed to negotiate in good faith, which is required in order for the city or be eligible for Chapter 9 bankruptcy relief.

Sherwood produced a copy of Mayor Dave Bing’s restructuring plan that listed $150 million in savings since 2009.

The lawyer asked Malhotra if he agreed that $150 million had been saved through outsourcing three departments, slashing 3,420 jobs and extracting concessions from vendors.

“We saw a lot of cost savings, but I do not know that they aggregate to $150 million,” Malhotra testified.

Gov. Rick Snyder, left, and Detroit Emergency Manager Kevyn Orr.

Gov. Rick Snyder, left, and Detroit Emergency Manager Kevyn Orr.

Gov. Rick Snyder will testify at 1 p.m. Monday during the Detroit bankruptcy trial without any time limits.

The state Attorney General’s Office told U.S. Bankruptcy Judge Steven Rhodes that the governor will take the stand at that time, prompting the judge to extend the length of the trial Monday to accommodate as long as four hours of testimony.

“We will run court until 5 p.m. instead of 3 p.m. because I don’t want to have to require the governor to come back for a second day,” Rhodes said.

Unions want to question Snyder about his discussions with Emergency Manager Kevyn Orr and his decision to authorize the city’s Chapter 9 bankruptcy on July 18.

The city’s bankruptcy trial so far has focused on claims that the city is insolvent and whether the bankruptcy filing was properly authorized by Snyder and if city officials made a good-faith effort to negotiate with creditors before filing bankruptcy.

U.S. Bankruptcy Judge Steven Rhodes plays rhythm guitar in the cover band The Indubitable Equivalents.

U.S. Bankruptcy Judge Steven Rhodes plays rhythm guitar in the cover band The Indubitable Equivalents.

U.S. Bankruptcy Judge Steven Rhodes presided over the biggest municipal bankruptcy case in U.S. history Wednesday in a borrowed courtroom — his is too small — and corralled dozens of lawyers with a mix of frustration and amusement while stressing simplicity.

“Who are you?” he snapped when a union lawyer failed to introduce himself.

“Why should I let you argue?” he said to another lawyer not involved in a narrow legal issue.

Later, he playfully corrected UAW lawyer Babette Ceccotti, who accused the city of a “lack of bad faith” during negotiations.

“You mean good faith?” Rhodes asked.

Yes, Ceccotti said. She blamed the gaffe on a lack of sleep.

Rhodes tried to cut through financial jargon as the afternoon dragged on, pressing city financial consultant Gaurav Malhotra to define terms such as “cash burn” and the acronym POC, or pension obligation certificates.

Speak in “plain English,” the judge prodded.

At the end of the day, Rhodes invited lawyers to leave their paperwork and belongings in the courtroom, in bankrupt downtown Detroit, overnight.

Many declined and left with their bulging briefcases.

The scene outside federal court Wednesday.

The scene outside federal court Wednesday.

Security officers are assigned each day to the Detroit bankruptcy trial and stand near the judge’s bench. They are, by and large, retired cops, mostly from the Detroit Police Department.

But you won’t find a retired Detroit cop working the Detroit bankruptcy case. That’s because the U.S. Marshals Service banned them from the case, which has broad implications on retiree pensions and health care, sources told The News.

The courthouse security officer who was assigned to U.S. Bankruptcy Judge Steven Rhodes’ courtroom on Wednesday retired from the ‘burbs. He was a daily fixture during former Mayor Kwame Kilpatrick’s corruption trial.

Jones Day lawyers David Heiman and Heather Lennox, on right, are seen leaving the federal courthouse after giving arguments in Detroit's bankruptcy hearing recently.

Jones Day lawyers David Heiman and Heather Lennox, on right, are seen leaving the federal courthouse after giving arguments in Detroit’s bankruptcy hearing recently.

City unions are framing Detroit’s bankruptcy as a foregone conclusion devised by lawyers who stood to make millions and carried out by Emergency Manager Kevyn Orr but a document obtained by The News suggests the city’s own bankruptcy team warned against a filing.

In January, the Jones Day law firm gave a presentation to Detroit and state officials in hopes of winning a lucrative job restructuring the city’s finances. The law firm’s pitch book included one page titled “Out of Court Solutions are Preferred.”

The Jones Day pitch– like Willy Wonka mailing a kid a glossy 1,000-page candy catalog with a disclaimer about sugar has a page warning — listed the benefits of a well-planned out-of-court restructuring.

less disruptive

less publicity

less expense

less reputational damage

less political impact

The page carried one caveat:

An out of court solution requires consensus or near consensus of affected constituencies. This is extremely hard to achieve in practice.

Consensus proved to be impossible in Detroit. On July 18, the city filed Chapter 9 bankruptcy.

AFSCME attorney Sharon Levine at the federal courthouse in Detroit on Wednesday. (David Coates/The Detroit News)

AFSCME attorney Sharon Levine at the federal courthouse in Detroit on Wednesday.
(David Coates/The Detroit News)

The trial over Detroit’s eligibility for bankruptcy is generating a lot of national and international attention.

The bankruptcy case has potentially far-reaching consequences for the treatment of pensioners and bondholders, which Emergency Manager Kevyn Orr has signaled he wants to cut in the Chapter 9 process.

Sharon Levine, a New York bankruptcy attorney representing the American Federation of State, County & Municipal Employees union, appeared on CNBC Wednesday morning to make her client’s case that pensioners should be held harmless from Orr’s ax.

Robert Snell
Robert Snell is the Detroit News federal courts reporter. He can be reached at rsnell@detnews.com or (313) 222-2028.