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Closing arguments set to begin in Detroit bankruptcy trial

Closing arguments start Friday in Detroit’s bankruptcy eligibility trial.

Witness testimony wrapped up this week, with former State Treasurer Andy Dillon and one of Governor Snyder’s top aides, Rich Baird, both taking the stand.

Dillon testified that he was “skeptical” after seeing Detroit emergency manager Kevyn Orr’s June proposal to city creditors, which included steep cuts to unsecured creditors, including pensions.

Dillon worried the offer was so bad it couldn’t possibly be a basis for negotiations, and that it, among other things, would make a bankruptcy filing look “premeditated.”

Lawyers for Detroit unions, pension funds and others have made that argument all along. They say Dillon’s testimony helps prove Detroit never bargained in good faith with its creditors, and the city should be denied bankruptcy protection because of that.

Emails also revealed that Dillon proposed pursuing unnamed “creative options” to restructure retiree pensions and health care outside bankruptcy. Those were never pursued.

Governor Snyder’s “transformation manager” Rich Baird also testified about his role in the events leading up to Detroit’s bankruptcy filing, and the hiring of emergency manager Kevyn Orr.

Baird testified that he was “never a representative of the state” and worked “with” the Governor, but not for him. At the time, Baird was on the payroll of Snyder’s controversial non-profit NERD fund.

Bankruptcy Judge Steven Rhodes ultimately gets to make the call on whether Detroit is eligible for Chapter 9 bankruptcy protection. He’s expected to issue a ruling late this month.

Sarah Cwiek joined Michigan Public in October 2009. As our Detroit reporter, she is helping us expand our coverage of the economy, politics, and culture in and around the city of Detroit.
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