Individual objectors get say in Detroit bankruptcy

DETROIT — Testimony will resume Wednesday in Detroit's hearings on its plans to exit federal bankruptcy protection, and the day will be about individuals who object to the plan, not big creditors.

Testimony on Day 21 of the historic bankruptcy proceedings will come as the city and its biggest holdout creditor, Financial Guaranty Insurance Co., inches closer to a settlement.

Court participants include city retirees Cecily McClellan and Irma Industrious, community activist Fredia Butler and former Detroit City Councilwoman JoAnn Watson, a staunch critic of state intervention into Detroit's financial emergency.

The individual objectors aren't represented by lawyers, and U.S. Bankruptcy Judge Steven Rhodes has the leeway to allow them to participate in the bankruptcy proceedings, said Doug Bernstein, a bankruptcy lawyer with Plunkett Cooney in Bloomfield Hills.

"This isn't something you necessarily see in every case," said Bernstein, who has represented philanthropic groups that have donated to the bankruptcy grand bargain that's aimed at easing Detroit retiree pension cuts while protecting the Detroit Institute of Arts from liquidation.

Rhodes "is trying to make sure every creditor body is heard and their concerns are addressed," Bernstein said. "Where they're raising something that isn't repetitive, he's giving them their day in court."

Rhodes is weighing whether the city's plan is fair to creditors and presents a reasonable, feasible road map for the city to operate in the long-term.

Detroit proposes slashing $7 billion of its $18 billion debt and reinvesting $1.4 billion in critical city services over the next decade.