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Detroit's Orr Wins Fast-Track Bankruptcy Hearing

CHICAGO — The first hearing in Detroit's historic Chapter 9 bankruptcy case is set for Wednesday.

The bankruptcy judge overseeing Detroit's Chapter 9 petition granted emergency manager Kevyn Orr's request for an expedited hearing on the motion that the city be protected from litigation in other courts as it pursues Chapter 9.

U.S. Bankruptcy Court Judge Steven Rhodes ruled Monday that he has authority over the city's historic filing despite a state court effort to halt it.

A trio of lawsuits filed by Detroit retirees, workers, and pension funds are seeking to block the Chapter 9 filing in state court. An Ingham County judge Friday agreed with the pension systems' lawsuit that Orr and Gov. Rick Snyder are not authorized to file for bankruptcy because it would impair worker benefits protected by the Michigan Constitution. A hearing on that is scheduled for next week in state court.

If Rhodes rules in favor of the city, it would halt the Ingham County lawsuit and all other litigation.

The city's pension systems Monday filed an objection to Orr's request for a fast-track hearing, saying the state appeal court should decide the issue and that an expedited hearing would deprive the pension systems and others of the ability to file briefs in a timely manner.

The city needs to prove that it's eligible for bankruptcy and that it negotiated in good faith with its creditors. Creditors are expected to fight both assertions.
At a press conference Monday, union officials said Orr never negotiated in good faith.

"Kevyn Orr has not held a single bargaining session with the unions," said Bob King, president of the United Auto Workers union. "They have meetings where they just talked at them and not with them."

Rhodes set a second hearing on the case for Aug. 2, where he will consider a deadline for any objections to Detroit's eligibility, Orr's request to set up a committee to represent the city's retirees, and hold an initial status conference.

The status conference agenda includes the schedule for future status conferences and omnibus hearings. The agenda also will consider a proposed order appointing an independent fee examiner, whose role is to ensure that all the city's fee expenses related to the bankruptcy are fully disclosed and reasonable.

The July 25 hearing will be held at 10 a.m. at the U.S. District Court for the Eastern District of Michigan.

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