Labor activist: Emails show Detroit's emergency managers always intended to declare bankruptcy

A Detroit labor activist has uncovered emails that indicate that the very people put in charge of saving the city financially were actually hoping the city would go bankrupt all along. According to the Detroit Free Press, with whom Davis shared the emails, revelations in the documents call into question whether the city's emergency management were ever negotiating in good faith, thereby lending strength to lawsuits currently trying to halt the bankruptcy.

"Ray Charles could see what's going on here," said activist Robert Davis at a press conference on Monday. "It's not hard to connect these dots."

He continued, "These emails are totally contrary to all the public statements which they have made on this particular issue."

Davis has been a gadfly to Emergency Manager Kevyn Orr since the Washington bankruptcy lawyer was called in to take over the city's finances. He has filed a series of lawsuits -- one of which a judge found to be frivolous, levying a $40,000 fine that Davis has yet to pay -- against Orr's office and the state, alleging that the reorganization plan unfairly targets retirees and pensioners, whose benefits are protected under the state constitution.

The public line from the Emergency Manager's Office and the Michigan state government under Republican Gov. Rick Snyder -- a tea party favorite and crony of corporatist billionaire Dick Devos -- has always been that bankruptcy would be a last resort for the city of Detroit, which has been struggling under the weight of its own debts. Included in the city's operating costs are the pensions of some 21,000 retired workers, which are guaranteed, as are all worker pensions in the state, under the Michigan state constitution.

Emails began between Snyder's administration and the Kevyn Orr's law firm Jones Day in January, although the team appointed to evaluate the city's financial health, led by state Treasurer Andy Dillion didn't rule until February 19 that it would be necessary to appoint an emergency manager.

Orr initially expressed reluctance to take the position, with he and another Jones Day lawyer arguing that it would be best just to go straight through with an "orderly Chapter 9 bankruptcy" rather than coping with the political fight that would be necessary to appoint an Emergency Manager whose orders would override those of city officials and Detroit Mayor David Bing (D).

Bill Nowling, a spokesperson for Orr's office, denied that anything untoward was discussed in the emails. "The notion that a Chapter 9 filing was a forgone conclusion is absurd. Kevyn Orr held more than 100 meetings with creditors, stakeholders and unions in the last three months before deciding that the best course for restructuring the city was to seek federal bankruptcy protection," he said.

Activist Davis said that the email record reveals that Snyder, Orr and Jones Day never had any intention of allowing the negotiations to succeed or believed that the bankruptcy was in any way avoidable. Orr and Jones Day, he said, stand to make millions in legal fees by facilitating the bankruptcy.

Mayor Bing said that he had done his best to cooperate with the emergency management team, but asked why the emergency team called in a bankruptcy lawyer if they had any other plan.

Officials told him “they wanted to do everything they could do avoid bankruptcy,” Bing said. “But they chose one of the most renowned bankruptcy lawyers in the country to be emergency manager. I’ll let people think what they want to about that.”

If Detroit goes through with its bankruptcy, thousands of retirees' benefits will be slashed and some pension funds will be lost altogether. Currently, labor rights groups and others have filed lawsuits against the city in an effort to halt the bankruptcy. If the city is shown to not have negotiated in good faith, which is at the core of Davis' allegations, then the bankruptcy can not progress.

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