Key dates set in Detroit bankruptcy case

(WXYZ) - Detroit's bankruptcy case now has key dates set while the issue of whether the Michigan Constitution protects city employee pensions from cuts is still unresolved. 

But in a surprise move, the lead attorney for Jones Day representing the city, David Heiman told the court the city would have its plan for reorganization ready at the end of this year. 

Detroit Emergency Manager Kevyn Orr may also be called as a witness in a dispute over 30 million dollars a month in casino revenue from the three Detroit casinos.  The money was used as collateral for loans to the city and Syncora Guarantee would have to cover the loss. 

That hearing has been set for September 9.

Judge Steven Rhodes also set October 23 for the trial on whether Detroit is eligible and March 1, 2014 for Detroit to file its plan.  

The judge ordered two issues to be decided in eligibility, whether Governor Rick Snyder's authorization for Chapter 9 Bankruptcy filing was proper under the Michigan Constitution and whether the city has bargained in good faith with creditors. 

The judge also ordered a committee be established to negotiate with Detroit City retirees who stand to take cuts in their pensions and health care.  Pensions are underfunded by $3.5 billion and Emergency Manager Kevyn Orr says the city can't afford $6 billion for retiree health care after this year. 

The Detroit deficit overall is $18 billion.  Detroit has 20,000 retired city employees and 10,000 active. The Bankruptcy Trustee will take applications for the committee and decide who gets on it.  Experts say it will likely be a dozen or so people including retirees and possibly union representatives. 

The judge heard several arguments in court on Friday who should be on the committee but made it clear that will be up to the Trustee, an arm of the U. S. Justice Department.  An attorney for the Trustee told the judge they will need 3 weeks to organize the committee.  The negotiations will begin even with the constitutional question unresolved. 

One attorney told the judge 24 states have similar constitutional protections for public employee pensions, so Detroit's case could set a precedent for all cities looking to cut their employee legacy costs. 

The judge also gave attorneys a week to give him their confidential input on appointing Chief U. S. District Judge Gerald Rosen as Mediator.  And a Fee Examiner will be appointed to review all of the costs of attorneys, experts and consultants hired by Detroit for bankruptcy.

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