March: Michigan’s Public Act 4 emergency manager law takes effect, giving state-appointed overseers of financially troubled cities the power to tear up contracts and make other unilateral moves usually reserved for locally elected officials.
November: Detroit Mayor Dave Bing says the city could run out of cash by April 2012 and have a shortfall of $45 million by June 30.
December: State Treasurer Andy Dillon orders a preliminary financial review of Detroit, announces the city is in “probable financial stress” and recommends Gov. Rick Snyder send a team to review city finances.
January: Dillon gives Bing until February to submit a financial plan to avoid an emergency manager.
March: A proposed consent agreement is given to the City Council. Moody’s downgrades the city’s tax debt. A state review team declares a “severe financial emergency.”
April: The City Council votes 5-4 in favor of a consent agreement with the state. The deal also called for the creation of a nine-member Financial Advisory Board to oversee fiscal restructuring, and a project manager and chief financial officer were empowered to carry out directives. Snyder and Bing then sign the agreement.
May: City Council members postpone action related to the consent agreement in anticipation of a lawsuit to be filed by Corporation Counsel Krystal Crittendon. She files a suit, but it eventually is dismissed.
June: The nine-member Financial Advisory Board holds its first meeting.
August: A proposed repeal of Public Act 4 is placed on the Nov. 6 ballot and the law is suspended. Public Act 72, the prior 1990 law that grants fewer powers to emergency financial mangers, is reinstated.
November: Voters repeal Public Act 4 in the general election.
December: Detroit’s Financial Advisory Board calls for a 30-day review of city finances under Public Act 72, saying the city was making slow progress and the board feared Detroit would run out of money by the end of the year.
December: Dillon, based on a preliminary review, concludes a serious financial problem exists in the city and recommends the appointment of a financial review team. Snyder appoints a six-member review team.
December: The Legislature approves and Snyder signs into law a new emergency manager bill — Public Act 436 — that allows fiscally struggling cities and school districts to choose from mediation, a consent agreement with the state, a state-appointed emergency manager or Chapter 9 bankruptcy.
January: An audit shows Detroit has a $327 million accumulated deficit as of June 30.
January: Bing announces a deal to release $20 million in bond funding from the state.
February: The review team unanimously concludes Detroit failed to restructure its debt and intervention from Snyder is needed because “no satisfactory plan” exists to resolve the city’s financial problems.
March: Snyder declares Detroit is in a financial emergency and needs an emergency manager.
March: Snyder appoints Kevyn Orr as Detroit emergency manager.
March: Opponents of Public Act 436 file a lawsuit in U.S. District Court in Detroit, arguing the legislation deprives residents of “constitutionally protected rights” and dilutes their vote.
March: Public Act 436 goes into effect, granting broader powers to Orr and other emergency managers statewide.
May: Orr submits a preliminary financial and operating plan to the state Treasury Department, saying Detroit’s cash-flow crisis makes it “insolvent” and unable to borrow more money.
June: Orr unveils to creditors his plans to restructure the city’s finances and avoid bankruptcy. The plan includes pension and retiree health care cuts, offering some creditors less than 10 cents on the dollar and a decision to stop payment of unsecured debt to allow the city to fund essential services.
July: The city files a lawsuit in an attempt to recover $11 million a month in casino payments and taxes that Detroit claims are being improperly withheld by an insurance company, a move the city says threatens its efforts to restructure its staggering pile of debt. The suit, filed against Syncora Guarantee Inc., alleges Syncora is keeping Detroit from receiving all the money it should be getting from its three casinos.
July: It is revealed that a group of Detroit retirees and city workers filed two separate lawsuits in Ingham County seeking to block Snyder’s administration from authorizing a municipal bankruptcy. The filing is in response to Orr’s plans to slash pension benefits and also names the state, governor and Dillon.
July: A federal court filing reveals Orr has reached an “important settlement” with creditors after a month of talks aimed at restructuring up to $20 billion of the city’s debt and long-term liabilities.
July: Orr submits a quarterly financial report to the state July 15 saying the city’s financial condition “continues to be dire.”
July: The city’s two pension funds sue Snyder July 17 to block him from authorizing what would be the biggest municipal bankruptcy in U.S. history. The Ingham County Circuit Court lawsuit argues that authorizing a Chapter 9 bankruptcy for Detroit would violate retirees’ constitutional right to a pension. The funds have previously said they have set aside a combined $5 million to fund a legal fight against a takeover by Orr of the systems’ $5 billion in assets.
July: Orr files a petition for municipal bankruptcy on July 18 in U.S. District Court’s Eastern District in Detroit.
July: U.S. Bankruptcy Judge Steven Rhodes is assigned to Detroit’s bankruptcy case on July 19.
July: Rhodes on July 24 freezes all lawsuits against the city challenging the legality of Detroit’s bankruptcy filing, clearing a path for the city to begin to prove its insolvency warrants protection from creditors. Rhodes’ ruling from the bench comes during the first hearing in Detroit’s week-old bankruptcy petition.
August: Orr on Aug. 5 announces he has contracted with Christie’s Appraisals, the New York-based international auction house, to appraise the collections of the Detroit Institute of Arts.
August: Rhodes creates a committee to represent city retirees in the city’s bankruptcy case. The judge also says he wants a mediator and fee examiner.
August: District Judge Gerald Rosen of the U.S. District Court for the Eastern District of Michigan is appointed Aug. 13 to mediate disputes between the city and creditors.
August: A nine-member retiree committee is appointed Aug. 22 to represent more than 23,500 municipal workers during the city’s bankruptcy case.
October: Orr says on Oct. 11 the city has secured a $350 million loan from Barclays to pay off an interest rate swap agreement with UBS AG and Bank of America tied to $1.44 billion pension-related debt. The loan would also help finance government service improvements while the city is in bankruptcy.
October: Snyder testifies in Detroit’s bankruptcy eligibility trial on Oct. 28. Snyder is believed to be the first Michigan governor in modern history to testify under oath in open court.
November: Rosen explores whether regional and national foundations could create a fund that would protect the Detroit Institute of Arts’ city-owned collection by helping to support retiree pensions.
December: A report from Christie’s of 1,741 items in the DIA’s more than 66,000 piece collection, values the city-bought objects between $452 million to $886 million. An earlier preliminary estimate pegged the value at $454 million to $867 million.
December: Rhodes rules on Dec. 3 that Detroit is eligible to file for Chapter 9. Rhodes ruled the city meets the criteria for bankruptcy, it is insolvent and dismissed challenges to the state’s emergency manager law and ruled that pensions are not protected by the state constitution.
December: Rhodes on Dec. 18 halts a trial on the Barclays loan to determine whether the city can finalize the $350 million deal, questioning whether it’s fair.
December: Orr and lawyers for the UBS AG and Bank of America reach a new $165 million agreement to terminate the pension debt deal during court-ordered Christmas Eve mediation.
December: Detroit’s bankruptcy mediators call the deal with the banks a “fair and equitable” solution and on Dec. 30 recommend that Rhodes approve the pension-related debt settlement.
January: Mike Duggan takes office as Detroit’s 75th mayor on Jan. 1.
January: Rosen on Jan. 1 orders discussions to continue on the fate of the city’s water department.
January: Rhodes on Jan. 16 rejects the renegotiated $165 million swap termination agreement.
January: Attorney General Bill Schuette on Jan. 27 asked the 6th Circuit U.S. Court of Appeals for an expedited decision on whether Michigan’s constitution protects pensions in Detroit’s bankruptcy case. Schuette argues a clause in the state constitution prevents cuts to retiree pensions. That contradicts a ruling by Rhodes, who said vested retiree pensions could be cut in federal bankruptcy court like other contracts.
January: Snyder announces on Jan. 27 plans to pour $350 million into Detroit’s pension funds over two decades. The state pledge would match a $330 million contribution from nine private foundations toward a fund to aid pensioners and keep city-purchased art at the Detroit Institute of Arts off the auction block.
January: The DIA vows on Jan. 29 to raise $100 million to help save masterpieces from being sold in bankruptcy. In exchange, the DIA would get clear legal title to the museum’s art collection and building.
January: A draft of the city’s preliminary plan of adjustment to reduce the city’s $18 billion in debt goes out to creditors, detailing health care concessions from retirees and a proposal to spin off the city’s water department to a regional authority.
February: Attorneys for the city reveal in bankruptcy court on Feb. 19 that a third settlement has been reached with two banks to end the city’s troubled pension debt.
February: Rhodes on Feb. 19 says he will issue a decision in two or three weeks about whether general obligation bondholders are secured creditors in Detroit’s bankruptcy case.
February: Rhodes on Feb. 21 grants permission for city’s pension funds and others to file direct appeals of the city’s bankruptcy for Chapter 9 bankruptcy relief.
February: City files plan of adjustment and disclosure statement about 11 a.m. Feb. 21.