Bankruptcy appears to give Detroit a way out of its difficulties, but according to one of the country's top bankruptcy lawyers there may be consequences that the city's emergency manager may not have considered, according to a Westlaw analysis on Friday. These consequences could include: the state of Michigan having to take responsibility for the city's underfunded pensions, a forced sale of its art collection, and a possible attack on the city's argument that some general obligation bonds were unsecured. "I'm not sure Detroit and Michigan have fully considered a whole list of these issues,” said Martin Bienenstock of Proskauer Rose. The bankruptcy filing stayed lawsuits filed in state court by retirees and unions, who challenged the authority of Michigan Governor Rick Snyder and Detroit Emergency Manager Kevyn Orr to take steps that would impair public worker retirement benefits. The question of authority will now be determined by Bankruptcy Court Judge Steven Rhodes, who has set a trial in October to determine if Detroit is eligible for bankruptcy.
