The political wrangling over Detroit’s bankruptcy restructuring plan intensified yesterday when the U.S. government, Oakland and Macomb counties (Mich.) filed official objections to the plan, the Detroit Free Press reported today. Separately, bond insurer Syncora said it plans to call Gov. Rick Snyder, state Attorney General Bill Schuette and former Detroit Mayor Dave Bing to testify during a summer trial about the case. The disputes over the future of the Detroit Institute of Arts and the Detroit Water and Sewerage Department (DWSD) served as the centerpiece for objections from several creditors. A group of major water and sewer bondholders also objected to the plan, adding a new legal obstacle to the city’s attempt to emerge from bankruptcy by mid-October. Oakland County accused Detroit emergency manager Kevyn Orr’s restructuring team of “putting the water and sewerage systems at risk” by considering transferring the assets to an outside authority in exchange for lease payments that could help reduce the city’s debt and provide revenue that could be reinvested in services. The U.S. government yesterday also said that it would oppose the city’s restructuring plan until its objections can be resolved. Attorneys for the U.S. objected on the grounds that the city owes $112 million to the Department of Housing and Urban Development, though the city says it owes $90 million. They also said that the city has failed to guarantee that it will follow Environmental Protection Agency guidelines during its restructuring. U.S. Bankruptcy Judge Steven Rhodes will conduct a confirmation trial starting July 24 to decide whether the plan is fair to creditors and feasible.
