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Judge expected to rule on Detroit bankruptcy soon, how could it go?


It's anyone's guess as to when the ruling will come, but most seem to think the bankruptcy will be approved in some form.

If it's not, at least one expert seems to think bad things could happen. From Crain's Detroit Business:

"If the bankruptcy is disallowed, frankly, expect all hell to break loose," said Anthony Sabino, a lawyer who teaches business law at St. John's University in New York. "Detroit will be at the mercy of its creditors in individual lawsuits spread amongst federal and state courts. That chaos alone could doom the city."

Hell breaking loose? Doomed?

Well, a bomb wouldn't drop, but the downward financial spiral would certainly continue as creditors that haven't been paid would sue for the money they're owed.

The Detroit Free Press' Nathan Bomey put it like this in his piece on the 6 different ways it could go:

The city would almost certainly be besieged by lawsuits, triggering an even deeper financial downward spiral that could lead right back into bankruptcy with even fewer assets to divvy up among creditors.

So, according to Bomey, a denial by Judge Rhodes is not likely to kick the city off the bankruptcy trajectory.

But others say Orr and the State of Michigan have exaggerated the amount of debt owed by the city.

The Guardian's Dominic Rushe writes about a report released yesterday by a left-leaning thinktank called Demos:

Detroit's debts are a fraction of the $18bn lawyers pushing for bankruptcy say they are, and their costs are "irrelevant, misleading and inflated," according to a report released Wednesday.

There are many complexities surrounding Rhodes' ruling, and many lives that will be affected. Experts say he'll take his time to try to get it right. 

Mark Brush was Michigan Radio’s Digital Media Director. He succumbed to a year-long battle with glioblastoma, an aggressive brain cancer, in March 2018. He was 49 years old.
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