My AnnArbor.com op-ed on why Emergency Managers are NOT better than Chapter 9 bankruptcy

Excuse me, but I beg to differ

Last week, AnnArbor.com Business news director Nathan Bomey penned an op-ed titled “Why bankruptcy is worse for Michigan cities than emergency managers”.

As you might imagine, I have an entirely different take on this which you can read at AnnArbor.com in a counterpoint op-ed today titled “The case against emergency managers: How bankruptcy preserves democracy”.

Here’s an excerpt:

The main thrust of Mr. Bomey’s argument is that Chapter 9 bankruptcy is an unpredictable, frightening prospect where municipalities lose control, union contracts are rejected, wages & benefits of employees cut, city vendors take a hit, and hard decisions are made by a single individual who doesn’t answer to the local community.

Every single one of these things describes exactly what occurs when an EM takes over a government. But you know what does not happen? The bankruptcy judge cannot simply do away with inconvenient elected officials. A bankruptcy judge cannot unilaterally dispose of the municipality’s assets to raise funds (despite what is claimed in the op-ed).

Section 904 of the law that governs Chapter 9 bankruptcies is very clear about this, limiting the ability of the bankruptcy court to “interfere with – (1) any of the political or governmental powers of the debtor; (2) any of the property or revenues of the debtor; or (3) the debtor’s use or enjoyment of any income-producing property” unless the city agrees.

The law also provides a mechanism for the assignment of a judge to oversee the process. While these judges are described in Mr. Bomey’s op-ed as uncaring and dispassionate, the law’s intent is to ensure that politics don’t play a role in how the bankruptcy plays out. When one looks at the people chosen as EMs in Michigan, bean-counting experts in outsourcing and union-busting, a non-political, neutral judge begins to sound a bit less scary.

Read the rest HERE.

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