Michigan expected to announce takeover of Detroit finances

Photo Credit: Reuters/ Rebecca Cook

Michigan Governor Rick Snyder talks about the city of Detroit being in a financial emergency state during a meeting with an invited audience at Wayne State University in Detroit, Michigan, March 1, 2013. REUTERS/ Rebecca Cook(Reuters) – Michigan Governor Rick Snyder is expected to announce on Thursday an emergency state takeover of Detroit, putting a lawyer with extensive experience managing corporate bankruptcies in charge of the destitute city’s finances.

The dramatic move will culminate the long decline of the once thriving center of the U.S. auto industry and birthplace of the Motown trend in popular music.

Republican Snyder is “highly likely” to name an emergency financial manager for Detroit at a news conference scheduled for 2 p.m. local time on Thursday, a source with direct knowledge of the decision said.

The top candidate for the job is Kevyn Orr, 54, a partner in the Washington, D.C., law firm Jones Day, who has long experience handling corporate bankruptcy and restructuring cases, said another source with direct knowledge of the choice.

Orr is best known for his work on the restructuring of Michigan-based Chrysler, which filed for bankruptcy in 2009, earning $1 million in fees during the first year of the case.

He has other Michigan ties, having received both graduate and law degrees from the University of Michigan. And he is African-American, which some politicians have said could help him deal with community leaders in a city that is 83 percent black.

Orr did not return calls and emails requesting comment. Snyder also declined to comment.

The emergency manager will face the huge and controversial task of repairing the finances of a city in crisis. Detroit has run operating deficits for nearly a decade, is starved of cash and facing a crushing burden of debt from commitments such as pensions and health insurance.

Detroit is the poorest major city in the United States with more than a third of the population officially classified as living in poverty, and it has an unemployment rate of 18.2 percent compared with a national rate of 7.7 percent, according to government figures.


Reuters has the full article

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