Kevyn Orr recognizes turning around Detroit will be the toughest assignment he's undertaken during three decades as a restructuring specialist, but that's why he wants the job.
"This is the Olympics of restructuring," Orr said in an exclusive interview with me prior to Thursday's announcement of his appointment as Detroit's emergency manager by Gov. Rick Snyder.
And he has no shortage of confidence in his ability to fix the city. Asked if he could get the job done in the allotted 18 months, he answered: "If people in a collegial and good faith effort get together, this could be done in as little as three to six months."
Here are edited excerpts from our conversation:
Q: The governor calls this the most difficult challenge in the country. Why on earth do you want it?
A: I'm a restructuring professional and have been for the past 30 years and I've been privileged … to work on some significant restructuring cases. So when I was originally presented with this opportunity, it attracted me for professional reasons. This is going to be quite difficult and involved, but also quite satisfying to be able to do it appropriately. It's the Olympics of restructuring, if you will, and who doesn't want to play at the highest level?
The second issue was my wife. She has been, unfortunately, forced to suffer me walking around the house Sunday mornings after listening to the talk shows and reading editorial pages, gruffing and griping about the state of affairs. She finally said, "Look, this is your call to action. Either put up or shut up."
Q: Does she realize what you're walking into? Are you prepared to be the most hated man in Detroit?
A: I'm prepared to be the most hated man for a period of time, but I think once people realize what we're trying to do, some of that vitriol will abate. … You're not going to get to where you need to be without someone stepping up to do a very difficult job. Frankly, I anticipate a lot of people … are ready for a change.
Q : Are you prepared for life under a blanket of security?
A: Yes, of course. The reality is I'm neither naive or reckless in terms of what some emotions may be. … I think in terms of public service and doing what's right, and what you should do, not just as a restructuring professional, but as a citizen of the country.
Q: What about your background and skill set makes you uniquely qualified for this task?
A: I've been fortunate to have some very good restructuring experience. Additionally, the ability to read a balance sheet and look at the real world practical implications of some of the things that need to be done. I have some level of empathy, even though there are going to be some tough decisions that need to be made, and at least appreciate the consequences of what they may be. …When I was at the (Resolution Trust Corporation) it was another one of those heated times, with allegations of wayward government action and deprivation of due process and confiscation of property; it was quite controversial on all levels. So, throughout my career, there hasn't been something that I've worked on that hasn't been tough and difficult with a tremendous amount of pessimism at the front end. There hasn't been a matter I've worked on that someone hasn't said, it can't be done. You might recall with the Chrysler restructuring the consensus of the day was that no one's ever going to buy a car from a bankrupt auto company. Well, Chrysler is now going gangbusters.
Q: What's your initial assessment of Detroit's situation?
A: My preliminary assessment is that the concept that there's not an emergency financial crisis doesn't hold up — there is. You've heard all the reports about the unfunded pension obligations, the deprivation of city services, blight, quality of life. This is simply not a sustainable state of affairs. Something has to be done.
Q: What do you expect to tackle first?
A: The first thing I want to tackle is to get the data and try to prioritize … obligations and tasks. There are city services and community services for the great citizens of Detroit, lighting, policing, EMS, the need to deal with employee retiree health care benefits.
Q: Can this be done in 18 months? What is the usual time frame for something this large?
A: There is no typical time frame. Frankly, all the interested parties and their representatives, I am sure, have looked at the same data that I'm looking at and recognize what needs to be done. … If people in a collegial and good faith basis could get together, this could be done in as little as three to six months. The math is the math. This isn't a Democratic issue or a Republican issue. It's not a black issue or a white issue — it's a green issue. So, if we have good faith and people are sincere about doing something, this can easily be done in 18 months.
Q: You have extensive bankruptcy experience on your resume. Are you here to take the city into bankruptcy? Do you expect bankruptcy to happen?
A: I'm going to put aside what I expect because that may be driven by externalities that aren't within my control. As I just said, if we have people who are working cooperatively, we can avoid a bankruptcy. This may sound strange coming from someone who's made his living doing bankruptcies, but a bankruptcy is not necessarily my preferred outcome.
Frankly, I'd like to avoid it. Bankruptcy can certainly have benefits to what the emergency manager would have to do, but I would like to think of that as a last resort as opposed to a first option. No, I don't think we're inevitably headed to bankruptcy, but people have got to be realistic, reasonable and focused on changing the architecture of the finances of the city so they can go into a sustainable model for the future.