Sep 28, 2014 1:33 PM

Bankruptcy's end more clear than Orr's future

The Associated Press

DETROIT (AP) Kevyn Orr's success in shepherding Detroit through its historic bankruptcy will leave him unemployed, at least temporarily, when and if his task in the Motor City is complete.

The turnaround expert who helped Chrysler through its 2009 Chapter 11 restructuring says he has given no thought to what he will do once Detroit's bankruptcy trial ends.

"I will talk to no one about a potential job until I'm done here," Orr said minutes after signing an order Thursday relinquishing most of the power he's had for the past year-and-a-half as state-appointed emergency manager back to the mayor and City Council. "I'll be truly unemployed hopefully in a couple of weeks."

Chances are he won't be jobless for long.

"Orr and his team have really done an extraordinary job in the last 18 months in guiding the city through uncharted water," said Michael Sweet, a bankruptcy attorney with Fox-Rothschild's San Francisco office. "It puts him at the forefront of people who do this. He would have accomplished in a very short period something no one has ever done."

Orr left the international law firm Jones Day to take the Detroit job in March 2013 for $275,000 per year. That July, he made Detroit the largest U.S. city to file for bankruptcy. At the time, he boldly predicted he would get Detroit out of bankruptcy by the end of his term.

While that has not happened yet, the massive debt, thousands of creditors and complex union and pension issues had many experts thinking Detroit's bankruptcy would take years to resolve, considering two California cities Stockton and San Bernardino filed a year before Detroit did and still haven't settled on plans.

His debt adjustment plan, which still must be approved in bankruptcy court by federal Judge Steven Rhodes seeks to wipe out $7 billion of the city's $12 billion in unsecured debt.

The plan calls for $1.7 billion to be used to pay for improved police, fire and other critical city services. But it also would cut pensions for non-uniformed retirees by 4.5 percent and erase cost-of-living allowances. Some cost-of-living payments for retired police and firefighters also would be lost.

Other cities faced with similar financial troubles are most certainly looking at Orr's Detroit work, said bankruptcy expert James Spiotto.

"He's clearly known as the emergency manager," said Spiotto, managing director of Chapman Strategic Advisors in Chicago. "He has gained the experience of working through this, and that provides a unique area of expertise. Various cities are looking for advice from various parties on what their alternatives are. Municipalities really want to make the decision themselves, but they're interested in good advice."

Each of Detroit's nine council members voted last week to end Orr's contract as emergency manager. Mayor Mike Duggan supported the measure, as did Orr, who told reporters that Duggan and the council were ready to take over.

Karen Kindell, a Detroit resident who works in health care, calls the moves "good" and says she is glad Orr no longer stands over Detroit.

"One person should not have the right to make so many decisions," Kindell said. "I want the council and the mayor to make decisions for the city."

The deal negotiated over three days with the mayor and council in closed sessions leaves Orr with complete authority over representing Detroit in the bankruptcy trial. His service ends when Rhodes accepts the city's debt plan. Orr still is expected to testify during the trial.

"Kevyn Orr has shown that he has an extraordinary grasp on what's going on in Detroit and he's done quite a job in pulling together all the disparate pieces necessary to get very close to resolving the bankruptcy," Sweet said.

"He is definitely someone people will talk to," he said. "Whether his experience and skill set are the best fit for the next Chapter 9 whenever there is one remains to be seen. He was the best fit for Detroit."


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