Howes: Detroit bankruptcy kudos widely shared

Daniel Howes
The Detroit News

It's tempting to say "enough already" with the continuing Detroit post-bankruptcy tour, marked by august meetings of civic and business leaders rising in ovation to the engineers of the largest municipal bankruptcy in American history.

It's also possible to focus too tightly on the end result and forget that culmination of the city's Chapter 9 nonetheless delivered hardship to individuals and their families, remaking a relationship with the city forged over 50 years — some of it good, most of it not so much.

Huge is too small a word to describe what happened over the past two years, a reminder that cynicism over recurring laps of the bankruptcy tour too quickly forget what was accomplished here — in Detroit, in less than 16 months, and without the heavy hand of the federal government.

No wonder the movers and the shakers sat rapt Wednesday as the bankruptcy's Big Three — U.S. Bankruptcy Judge Steven Rhodes, former Emergency Manager Kevyn Orr and Chief U.S. District Judge Gerald Rosen, the chief federal mediator — shared lessons and warnings in equal measure.

For too many there, the better parts of their professional careers coincided with decades of decline in Detroit. For too many years, exodus defined the city's sad story, a steady out-migration of people, businesses and tax revenue. For too long, Detroit's imminent fiscal collapse was the most open secret in American municipal finance.

The reversal deserves savoring, not taken for granted. The future requires more hard work, more local and regional cooperation, and more political discipline, as the Big Three suggested. Detroit's reckoning delivers a simple message: Don't forget.

"Make sure everyone remembers this tale — three, four, five, seven years from now — and that everyone's on watch," Orr told the Crain's Newsmakers of the Year luncheon crowd at MotorCity Casino, where he and Rhodes shared the honor.

Don't forget the embarrassment and the uncertainty, the disruption and the brutality, the trimmed pensions and the gutted health care, the lawyers and their fees, the corruption piled on top of incompetence. And don't think a third chance would be easier than the second; it wouldn't be.

"I did not want to be known as the judge on Detroit's first bankruptcy case," Judge Rhodes said. "I knew from the beginning we had to get Detroit through the bankruptcy process as promptly as we possibly could."

Keith Crain, chairman of Crain Communications Inc. and editor in chief of Crain's Detroit Business, put it right when he said: "The right people in the right places making the right decisions helps a lot."

Yes, it does. He meant Rhodes, Orr, Rosen and their respective staffs, certainly. But there were many more: Gov. Rick Snyder and his team; union and pension fund leaders and their lawyers; armies of bankruptcy lawyers arrayed against one another.

Detroit's retirees possessed the power, through their vote, to scuttle the central deal of the bankruptcy. Without the "grand bargain" that pumped $816 million into city pensions and rescued the Detroit Institute of Arts' collection from possible (though not certain) liquidation, the case likely would still be in litigation.

Think about that. Here in the birthplace of the modern labor movement, the place where open confrontation lies somewhere between sport and art; here, in Detroit, significant majorities of two classes of retirees voted to accept a deal that promised to minimize their losses and ensure the DIA.

Neither they nor their representatives are official members of the victory tour. Maybe they should be, because without their affirmative vote there would be no grand bargain and, most likely, no resolution to the case.

"It could have fallen apart anywhere along the line," Rosen said, "but nowhere more so than with the retirees' vote."

That it didn't is evidence of something that arguably gets too little attention in a case dominated by big-name law firms and consulting firms: Detroiters played a critical role in delivering the city's financial fresh start.

Not just residents and city retirees, either. Local law firms and consulting groups, regional politicians and state lawmakers, Republicans and Democrats contributed to a resolution that forms the foundation for Detroit's fresh start.

So did judges, namely Rhodes, Rosen and several local members of his mediation team credited with delivering an almost entirely consensual resolution. This, in Detroit, where confrontation comes as naturally as breathing.

For years, Judge Rhodes pushed for bankruptcy venue reform. Too many of southeast Michigan's largest bankruptcies — General Motors Corp., Chrysler Group LLC, Kmart Corp. and Delphi Corp. — ended up in New York or Chicago instead of here at home.

The members of the Detroit bar, he maintained, could handle big cases. He was right, and they weren't the only ones — not even close.

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Daniel Howes' column runs Tuesdays, Thursdays and Fridays and can be found at