Detroit Bankruptcy Trial Begins

A U.S. district judge began hearing arguments Tuesday to evaluate Detroit’s efforts to rescue itself from bankruptcy and duke it out with creditors. Judge Steven Rhodes will decide whether to approve the Motor City’s plans to eliminate $7 billion of its $18 billion debt and invest $1.5 billion in public services. At stake are 32,000 pensions, as well as the city’s municipal art collection, both of which may be vulnerable to creditors. “If we were being treated fairly, we could probably swallow hard and get over the procedural unfairness,” said James Sprayregen, an attorney for Syncora Guarantee Inc., one of the two major city creditors. “They’re treating pensioners unbelievably and massively better than my clients.” Rhodes will also evaluate the legality of some of Detroit’s more controversial financial practices, including shutting off water to delinquent customers. Opponents argue it puts especially vulnerable people, such as the elderly and children, in “imminent” danger, and Rhodes may issue a temporary restraining order against it.