Friday, July 19, 2013

Bankruptcy Firmly Under State Control

Thursday June 18, 2013 Emergency Manager Kevyn Orr pushed through an Executive Order requesting Governor Rick Snyder to approve Detroit entering into municipal bankruptcy. The bankruptcy question has been looming for a while, but the State of Michigan wouldn't allow it to happen. Now the city is on the chart of Bankrupt Cities, Municipalities List found on the governing.com website. The State wouldn't allow Hamtramck to enter bankruptcy in 2000 or 2010. Could the intent of law simply not have been ready then? The quickening pace of churning laws has become dizzying for many. Step by step passages change to open up new ground, consume other, and reroute; many laws are narrowing in focus to provide an us and them slant of favoritism through the conditions applied.

This year Hamtramck had a choice as the first city going through the full power of Public Act 436 of 2012. They could choose from the options of: bankruptcy, consent agreement, emergency manager, or mediation -- their choice was emergency manager. Governor Snyder appointed Pontiac City Administrator Cathy Square as Emergency Manager of Hamtramck on June 26.

Detroit didn't have a choice, because the emergency manager was appointed before the effective date for PA436. Detroit was affected by Attorney General Bill Schuette's opinion that Public Act 72 of 1990 was resurrected since there was no replacement emergency manager law when Public Act 4 of 2010 was removed by referendum vote of the people on November 6, 2012. (Read additional legal discussion by Kurt Koehler, esq.) This resurrection of law flies in the face of MCL 8.4.1.
Whenever a statute, or any part thereof shall be repealed by a subsequent statute, such statute, or any part thereof, so repealed, shall not be revived by the repeal of such subsequent repealing statute.

Read prior blog posts to understand how this opinion needed to be contested but failed to be approached properly.

Reading through PA436 you'll find the State of Michigan has placed itself above the people of the city in negotiating the terms of bankruptcy stating (found on the 12 steps of a financial emergency on the State of Michigan website).
The Governor may place contingencies upon a local government, including the selection of an individual to act exclusively on behalf of the local government in any Chapter 9 proceedings.
As much as it would be great to see Emergency Manager Kevyn Orr "do the right thing", it really ends up being what the Governor wants. The "viceroy" is taking direction from his superior. 

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