Even though emergency manager Kevyn Orr announced in July he planned to have Detroit declare Chapter 9 bankruptcy, the city still needs federal court approval to do so. The process has not been a smooth one, as many vested interests involved in the potential restructuring – namely the city’s public sector unions and creditors – have pushed back significantly. Bondholders and other creditors are fighting the prospect of receiving pennies on the dollar, and unions say a bankruptcy would violate the state constitution, which protects retiree benefits.
US Bankruptcy Judge Steven Rhodes will preside over an eligibility trial scheduled to begin Oct. 23. It will examine the issues involved in ultimately authorizing the bankruptcy.