23 April 2014

Feasibility in Detroit

Not cars, mind you, but Detroit's Chapter 9 plan of adjustment.

Go here to read Reuters report.

For the first time in a Chapter 9 case (at least to the awareness of everyone at Widener Law Journal's symposium on Municipal Financial Distress), a bankruptcy judge has appointed an expert to report on whether a plan of adjustment is "feasible." Feasibility is one of the requirements for confirmation but has historically been given short shrift by courts.

I argued in my presentation that taxpayers should be given standing as parties-in-interest to contest whether a plan is feasible but Judge Rhodes has already decided to go the "expert" route instead.

Vigorous contests of all the Chapter 9 confirmation requirements by parties is still, I believe the better approach but I am heartened to see that feasibility will get the consideration it deserves. And, if the plan isn't feasible, dismissal, or at least its threat, awaits.

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