Michigan Gov. Rick Snyder, a Republican, on Monday defended Detroit’s bankruptcy filing on the stand, calling the step a necessary last resort. Bloomberg was one of several news outlet covering the governor’s testimony before a federal judge. “I describe it as the largest issue in our country,” Snyder said of Detroit’s fiscal woes. “This has been a large issue for 60 years.”
It’s an issue Synder says he devoted himself to when he took office in 2011. In March, the governor appointed Kevyn Orr as the emergency financial manager for the city. Snyder said during his testimony that he has spoken about the city’s finances with Orr weekly since that date.
In addition to testifying, Snyder also issued a press release on Monday, in which he said, “I offered my testimony today to help expedite these proceedings so we can continue with Detroit’s comeback for the benefit of its residents and the entire state of Michigan.”
Orr’s testimony before the judge was similar in tone and necessity, according to Bloomberg. “The situation seemed to be growing more and more precarious and somewhat out of control,” he said.
The Detroit Free Press reported earlier in October that The International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW) had subpoenaed Snyder to testify in Detroit’s bankruptcy trial. UAW is one of several labor groups fighting to have the case thrown out; the labor groups disagree with Snyder.
The groups do not believe that bankruptcy was approached as a last-ditch effort, arguing that Snyder and Orr did not exhaust every means available to them in filing bankruptcy, adding that they were not consulted, which violates Michigan’s state constitution. Dismissing the case from bankruptcy allows lawsuits to be filed against Detroit and any restructuring plan.
Chapter 9 cases, the U.S. Courts website explains, are rare. The Municipal Bankruptcy Act, passed by Congress in 1937 and upheld by the Supreme Court in 1938, has been used by a municipality to file bankruptcy fewer than 500 times. For a municipality to be eligible to file Chapter 9 bankruptcy under 11 U.S.C. § 109c, it must prove it is sanctioned by state law to be considered a debtor that is insolvent and has a plan to resolve its debts.