Reminder from Detroit, the NYT: Bankruptcy isn’t cheap.

posted at 6:01 pm on October 8, 2013 by Erika Johnsen

Somehow having managed to completely brush aside all of the many, many incentives for avoiding bankruptcy in the first place, some of Detroit’s officials and pensioners are once again up in arms over one of the myriad consequences of decades upon decades of willfully profligate spending: Going through the bankruptcy process is a mighty expensive one, and as the city hires lawyers, accountants, and administrators to steer them through the months and years of financial reorganization still to come, they’re quickly racking up bills that will likely amount to more than $100 million on their own before all is said and done. Via the New York Times:

This city is learning that it is expensive to go broke.

Even as it wrestles with the $18 billion of debt that has overwhelmed it, Detroit has already been billed more than $19.1 million by firms hired to sort through that debt, search for ways to restructure it, and now guide the city through court. That does not include more costs that the city is expected to bear for the support staff for its state-appointed emergency manager, and for another set of lawyers and consultants to represent city retirees. …

The uncharted scale of Detroit’s bankruptcy — it is the largest municipal bankruptcy filing in the nation’s history in terms of both the city’s population and its debt — suggests that it may also become the costliest, experts say. City officials offer no estimate for a final tab, but some bankruptcy experts say the collapse could ultimately cost Detroit taxpayers as much as $100 million. As of last week, 15 firms had contracts with the city that could total as much as $60.6 million, city records show. …

Bankruptcy reliably means the selling off of assets, and one of the more controversial suggestions for ways in which the city can raise some cash has been auctioning off Detroit’s art collection — but even that isn’t free.

Among other tolls the city now unhappily finds itself bearing: $200,000 (plus as much as $50,000 in expenses) to Christie’s, the auction house, to appraise works at the Detroit Institute of Arts as part of the proceedings, despite strenuous objections of Detroit leaders at the very thought that the art may be at risk.

Anyhow, I’m not sure what the city’s creditors were expecting in terms of the financial process behind a bankruptcy; this meltdown has been a long time coming, and huge municipal filings aren’t exactly your run-of-the-mill, simple fixer-upper accounting jobs. This stuff requires some serious expertise, and that comes at a price:

“This is the largest, most complicated Chapter 9 filing in the state’s and country’s history,” said Sara Wurfel, a spokeswoman for Mr. Snyder, who approved the city’s pursuit of bankruptcy protection. “It will solve a financial crisis 60 years in the making. While it’s imperative that we’re being extremely prudent on costs, it’s also imperative that this is done right and as quickly and efficiently as possible.”

Even with the greatest financial minds in the world and some oblique assistance from the Obama administration, nothing is going to erase the long days of material hardship through which Detroit is going to have to slog before they can get anywhere near reentering the realm of the financially stable, thanks to decades of extravagant Democratic leadership.


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There is no such thing as “broke” to a Democrat.

What that means to them when they hear that term is “we need to tax more”.

TEATERMERICA…..Find a warm one all you deadbeats and suckle on.

PappyD61 on October 8, 2013 at 6:07 PM

…despite strenuous objections of Detroit leaders at the very thought that the art may be at risk.

Perish the thought of having to divest yourself of some assets when you hang your creditors out to dry. What gall!

CycloneCDB on October 8, 2013 at 6:12 PM

there I was…a kid admiring all the Pontiacs my best friend’s dad drove home every night. Being a Gulf States regional dealer rep afforded him access to the first GTO, 2+2, Grand Prix, Firebird, etc this impressionable little dude ever saw. We had so many Pontiacs because of his dealer connections.

I was determined to grow up and be an automotive engineer working in Detroit and grooving to Motown tunes came easy. As it is I’m stuck as a grunt self employed civil engineer in Houston. Turns out bankruptcy and Marshall Mathers turn me off too.

So glad I failed in pursuing my childhood dreams.

DanMan on October 8, 2013 at 6:14 PM

despite strenuous objections of Detroit leaders at the very thought that the art may be at risk.

Ever watched an episode of Hoarders? Those people don’t want to give up their stuff, either.

Kafir on October 8, 2013 at 6:16 PM

50 years of Democrat governorship.

antipc on October 8, 2013 at 6:22 PM

Detroit is not worried, barry just gave them $300M of taxpayer money to help.

Remember, Detroit is too big to fail.

rightside on October 8, 2013 at 6:25 PM

More cronyism. It does not have to cost that much, but every opportunity to extract money from the people has to be taken as far as it possibly can go.

astonerii on October 8, 2013 at 6:26 PM

They just need a higher credit limit, silly.

rogerb on October 8, 2013 at 6:26 PM

there I was…a kid admiring all the Pontiacs my best friend’s dad drove home every night. Being a Gulf States regional dealer rep afforded him access to the first GTO, 2+2, Grand Prix, Firebird, etc this impressionable little dude ever saw. We had so many Pontiacs because of his dealer connections.

I was determined to grow up and be an automotive engineer working in Detroit and grooving to Motown tunes came easy. As it is I’m stuck as a grunt self employed civil engineer in Houston. Turns out bankruptcy and Marshall Mathers turn me off too.

So glad I failed in pursuing my childhood dreams.

DanMan on October 8, 2013 at 6:14 PM

I’ve always been a car guy, but I have no further interest in anything built by the greedy UAW.

slickwillie2001 on October 8, 2013 at 6:42 PM

‘We saved the auto industry!!!’

‘No bailout for Detroit!!!”

‘Just the Tip!!!’

BigWyo on October 8, 2013 at 6:42 PM

While it’s imperative that we’re being extremely prudent on costs, it’s also imperative that this is done right and as quickly and efficiently as possible by people with close ties to the current politicians.

It will always be a feeding trough, even in bankruptcy.

hisfrogness on October 8, 2013 at 6:54 PM

So glad I failed in pursuing my childhood dreams.

DanMan on October 8, 2013 at 6:14 PM

I’ve always been a car guy, but I have no further interest in anything built by the greedy UAW.

slickwillie2001 on October 8, 2013 at 6:42 PM

In case you guys missed this at Drudge this morning, apparently truck buyers don’t take kindly to bailouts:

http://nlpc.org/cached/survey-auto-bailout-drag-gm-truck-sales.html?q=stories/2013/10/08/survey-auto-bailout-drag-gm-truck-sales

hisfrogness on October 8, 2013 at 6:59 PM

I’ve always been a car guy, but I have no further interest in anything built by the greedy UAW.

slickwillie2001 on October 8, 2013 at 6:42 PM

we’re the same and not alone in that regard, there’s an article out today where GM admits being owned by the g’ment is killing them. Texas buys more pick ups (biggest profits) than the next three states combined. Recent polling shows up to 60% of Texans won’t think about GM when looking for a new one. I quit Jersey made Chevy’s back in the Torricelli/Lautenberg fiasco days and will likely replace my F150 with a Toyota.

I bet I’ve owned at least 25-30 GM products between me, my wife and kids and we don’t own any at all now. I was so pro American made it makes me cringe, especially after watching the unions in Wisconsin.

DanMan on October 8, 2013 at 7:05 PM

hisfrogness on October 8, 2013 at 6:59 PM

there you go

DanMan on October 8, 2013 at 7:06 PM

hisfrogness on October 8, 2013 at 6:59 PM

Me and my wife do not either. No purchase from a government welfare recipient.

astonerii on October 8, 2013 at 7:12 PM

There is no such thing as “broke” to a Democrat.

What that means to them when they hear that term is “we need to tax more”.

TEATERMERICA…..Find a warm one all you deadbeats and suckle on.

PappyD61 on October 8, 2013 at 6:07 PM

Heard in Detroit City Hall recently….

– “How can we be broke, when we can still raise taxes?”

– “That’s easy! Just borrow more money!”

– “Broke?! But we just tripled our budget!!”

There Goes the Neighborhood on October 8, 2013 at 7:20 PM

Detroit should sell of chunks of it’s land area to developers with a contractual agreement that makes said area exempt from regulation by the city government.

Count to 10 on October 8, 2013 at 7:47 PM

Ever watched an episode of Hoarders? Those people don’t want to give up their stuff, either.

Kafir on October 8, 2013 at 6:16 PM

They also tend to think they could get more money from it than anyone is willing to offer.

Count to 10 on October 8, 2013 at 7:50 PM

Even the sale of art/property assets brings a terrible cost and cautionary tale…

Many of the donors of materials for the Detroit Institute of Art, and the myriad other entities involved, attached codicils and specifics that make “return of the properties” to the heirs of the owners mandatory.

So.

You just got a couple of cool million for the classic oil “Swans Twerking in the Park”, and the heirs demand the thing back under these contractual conditions.

What’s it going to cost you to get the thing back, before you are gutted, skinned and otherwise basted and baked by the legal system?

Gonna cost some SERIOUS change to do the research and keep that stuff clean.

The High Cost of Going Broke. Oh, how I weep for these nits.

heldmyw on October 8, 2013 at 8:00 PM

Both my Hondas are made in the good ‘ol USA!
Ford, the only Big Three not to get gubmint money, is the only company I have ever bought a truck from.
And I will again.

Bubba Redneck on October 8, 2013 at 8:15 PM

“The high cost of going bankrupt” isn’t a result of mistakes one could possibly make in the process of bankruptcy but is a result of mistakes already made that led to the bankruptcy in the first place.

Detroit wouldn’t have the problem of bankruptcy (and it’s subesequent costs) had it managed it’s finances properly in the first place. Don’t blame the bankruptcy for Detroit’s woes… blame Detroit.

The same could be said regarding the Federal Government and it’s shutdown.

Chaz706 on October 8, 2013 at 9:27 PM

Goodbye Detroit. Recently had to replace our GM Suburban purchased over 10 years ago. It performed well, but I didn’t even bother to look at GM or Chrysler products when shopping for a new vehicle – I won’t do business with them ever again after the bailout. Ended up buying a new Infiniti.

Over50 on October 9, 2013 at 12:25 AM

The chapter 9 filing was all so unnecessary.

Detroit should just print it’s own Detroit Dollars and use them to pay for whatever they want.

It works for the federal government, so I don’t see why funny money wouldn’t work for cities and states.

Problem solved. Just print whatever you need to have whatever you want. Rod Sterling would have loved the idea.

BMF on October 9, 2013 at 9:18 AM

Both my Hondas are made in the good ‘ol USA!

Bubba Redneck on October 8, 2013 at 8:15 PM

Probably in Marysville, OH by some of my friends and relatives. Honda is huge in Ohio (especially with all it’s little supplier companies), and treat their workers very well. The UAW has tried for years to get in there but keep getting rebuffed by the workers who are paid better and treated better than their GM equivalents.

dominigan on October 9, 2013 at 11:22 AM

Dissolve Detroit.

Seriously.

I know it sounds “OCP”ish, in a way, but I have waaay more faith in private enterprises “buying” pieces of Detroit, setting up new infrastructure, and “selling it” as a small municipality back to the residents and businesses in order for them to form their own municipal government.

After all, Detroit is scr3wed beyond repair as it is.

Turtle317 on October 9, 2013 at 2:12 PM

This needs to be forwarded to the different liberal states in the US. If they think this is big, wait until California, Illinois and Massachusetts run into the same mess.

djaymick on October 9, 2013 at 5:29 PM