Bankruptcy judge: Lessons to be learned from Detroit
Troy — U.S. Bankruptcy Judge Steven Rhodes, who had a herculean task of managing Detroit's historic bankruptcy case last year, on Saturday called the city's economic plight a cautionary tale to be learned from.
"There are lessons in the Detroit case for everyone of us," Rhodes said. "The City of Detroit got into trouble because people ran the city. People who were not perfect. People who made mistakes and people who took unnecessary risk with the assets and responsibilities that were entrusted to them."
The remarks by Rhodes were part of his keynote speech Saturday during the 104th commencement ceremonies for Walsh College, held at Zion Christian Church.
Rhodes asked 227 of the 427 business graduates who walked Saturday what they could learn from Detroit's bankruptcy experience.
He pointed out the municipal bankruptcy is an example of both what one should and shouldn't do in their lives.
Because of the plan, said Rhodes, the city shed more than $7 billion of the city's $18 billion of debt and obligations, brought its credit rating up from junk status to "investment or nearly investment grade" and treated the city's creditors as fairly as it could, setting Detroit on course to restore adequate city services.
"Lesson No.1 from the Detroit bankruptcy case is this: In this country, we love to help people," he said. "We love to give people a second chance, a fresh start, to forgive them. That is of course what bankruptcy is all about. It is a chance for people, who have fallen on hard times or made bad choices, to start over."
He pointed out Chrysler and General Motors need to be bailed out during the Great Recession, and even Henry Ford filed for bankruptcy when his Detroit Automobile Company failed in 1901. U.S presidents Thomas Jefferson, Abraham Lincoln, Ulysses S. Grant and William McKinley filed for bankruptcy, added Rhodes.
"Help was there for the City of Detroit, too," he said. "Help is out there, and this leads to lesson two: Ask for the help that is out there."
Rhodes explained no one goes through life without hitting rough patches.
"You will need help," he said. "You need help because you are just starting out on this new career path. You will need help because you will make mistakes. You will need help because you will suffer the reversals of life. You will need help because of simple bad luck. What ever the reasons, everyone needs help."
Before Rhodes' speech, Walsh College presented him with an honorary doctoral degree in law.
Rhodes earned his Juris Doctor degree from the University of Michigan Law School in 1972 and also served as editor of the Michigan Law Review. He earned a Bachelor of Science degree in Mechanical Engineering from Purdue University in 1970.
Rhodes previously served as chief judge of the U.S. Bankruptcy Court's Eastern District in Michigan from 2002 to 2009. Rhodes was on the Bankruptcy Appellate Panel of the Sixth Circuit from 1997 to 2004 and also from 2008 to 2011. He also served as chief judge of the Bankruptcy Appellate Panel from 2002 to 2004.