The News Courier in Athens, Alabama

State and Nation

August 19, 2013

Creditors file objections to Detroit bankruptcy

(Continued)

He filed for bankruptcy on July 18, claiming the city has at least $18 billion in liabilities, from underfunded pensions and health care costs to bonds that lack city revenue to be paid off.

Orr also stopped payment on $2.5 billion in debt in June.

Michigan Attorney General Bill Schuette, who earlier joined the battle on behalf of city pensioners, wrote in a 20-page statement filed Monday in federal court that constitutional protections cannot be stepped on.

"No reasonable person can disagree that the city of Detroit is bankrupt and that federal bankruptcy proceedings under the leadership of emergency manager Kevyn Orr is the only avenue to rebuild the Motor City," Schuette, a Republican, said in a release. "However, throughout this bankruptcy process, protections enshrined in the Michigan Constitution ... must be honored, respected and followed."

That contention also will be part of the objections that will be filed by the city's two employee pension systems, said Bruce Babiarz, spokesman for Detroit's Police and Fire Retirement System and General Retirement System.

The systems are the city's two largest unsecured creditors.

Detroit has about 21,000 retired workers who are owed benefits, with underfunded obligations of about $3.5 billion for pensions and $5.7 billion for retiree health coverage.

Mary Dugans, one of those retirees, filed an individual objection Monday.

"I need my pension for basic human needs," she wrote in her one-page filing. "Additionally, I'm 80 years old with age related medical conditions. Therefore, I have to pay for medical co-pays as well as for prescribed medications. Please consider my situation as you approach this important matter. Thanks."

Monday's deadline for objections drew protesters outside federal court in Detroit.

Some in a group of about 30 people amassed outside the building said in their filings that there are no provisions in Chapter 9 that gave Orr authority to file the bankruptcy petition and that it was done without consent of the city's elected representatives.

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