Governor Rick Snyder to back Detroit bankruptcy decision in court

 

A reluctant Rick Snyder, the Republican Governor of Michigan, will go on the stand on Monday to defend the decision by Detroit’s emergency manager, his appointee, to put the city into bankruptcy in July, a move that public employee unions say was an unwarranted manoeuvre to rob their members of benefits and slash pensions.

His testimony will mark the climax of a trial  to determine whether Detroit was genuinely insolvent, as the emergency manager, Kevyn Orr, claimed when he filed for the largest municipal bankruptcy in American history, or whether the city was trying to short-circuit negotiations on keeping up with its obligations to retirees and public workers, as the unions claim.

Mr Snyder, who only agreed last week to appear after receiving a subpoena from the United Automobile  Workers, will insist Mr Orr had no choice, because the city, some $18bn in debt, was close to the point when it could no longer pay wages to all its  workers, such as the city police.

While the trial is likely to wind up this week, Judge Steven Rhodes has invited all sides to make additional written submissions by mid-November before a final decision.

If he approves the bankruptcy, the city has said it will come up with a restructuring plan. It will include inevitable cuts in pensions and healthcare benefits for retired municipal workers. But if the filing is denied by Judge Rhodes, the city will be forced to return to the negotiating table with its creditors and the pension funds.

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