Detroit manager defends actions before bankruptcy

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In this March 14, 2013 file photo, emergency manager Kevyn Orr listens to a question during a news conference in Detroit. Gov. Rick Snyder announced that he had chosen Orr as Detroit’s emergency manager. (AP Photo/Paul Sancya)

by Ed White
Associated Press Writer

DETROIT (AP) — Detroit’s emergency manager faced tough cross-examination Tuesday from lawyers for unions and retirees as he defended his decision to take the city into bankruptcy without first striking a deal to prevent pension cuts.

It was Kevyn Orr’s third day on the witness stand during a trial to determine if Detroit’s bankruptcy case can go forward. The city must show it was broke and tried to negotiate with creditors in good faith before filing for Chapter 9 protection in July.

The opposition is led by Detroit’s unions and pension funds, which have much to lose if the city is declared eligible to rework $18 billion in long-term debt. Orr has said the pension pools are underfunded by $3.5 billion, but he hasn’t proposed what to do about it.

Orr will return to the witness chair when the trial resumes Monday.

The Michigan Constitution prohibits public pensions from being impaired. Orr said he believes federal law could trump that provision, although he acknowledged there’s no legal precedent.

Under questions from a United Auto Workers lawyer, Orr testified that he and his team were prepared to negotiate with creditors after telling them in a private meeting on June 14 that they might get just pennies on every dollar owed.

“Yes, that’s why we called it a proposal,” he said.

But when asked if he would have agreed to keep hands off pensions, Orr replied: “Probably not.”

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