Former Michigan Treasurer Andy Dillon said yesterday that he was "very skeptical" that Detroit would be able to cut an out-of-court deal with its creditors to avoid bankruptcy after reviewing the city's June 14 report that said unsecured creditors would only receive pennies on the dollar, Reuters reported yesterday. Dillon, who resigned last month, testified on the seventh day of a trial to determine whether Detroit is eligible to reorganize its finances under bankruptcy protection. Dillon played a key role in the lead up to Detroit's July 18 bankruptcy filing by serving on review teams that scrutinized the city's finances. In a July 9 email to Michigan Governor Rick Snyder that was cited in court yesterday, Dillon wrote that there were "creative options" for Detroit's public pension shortfall, but he testified yesterday that he did not pursue any of those solutions because the pension deficit was "relevant but not a driving factor" behind the city's trip to U.S. Bankruptcy Court. Detroit has $18.5 billion in debt and other obligations, which the city and state say includes a $3.5 billion unfunded pension liability, a figure that is disputed by bankruptcy opponents in the case. The opponents, who include the city's labor unions, retirees and pension funds, are trying to prove that Detroit officials failed to try to negotiate a deal with them and other creditors ahead of the July 18 bankruptcy filing.
