Detroit delayed vendor payments
DETROIT — Short of cash, Detroit was delaying payments to vendors and “operating on a razor's edge” for weeks before it filed for bankruptcy protection, the head of the city's turnaround team testified on Thursday.
Ken Buckfire, a Wall Street investment banker and Detroit-area native, gave the most detailed testimony so far on the second day of a trial that will determine whether the city can stay in bankruptcy court and eventually unsaddle $18 billion in debt.
Detroit must show it's broke and tried in good faith to negotiate with creditors. Unions and pension funds with much money at stake claim the city did not hold genuine talks; therefore, they argue, the case should be thrown out.
Buckfire's firm, Miller Buckfire, got involved in Detroit's finances before the bankruptcy. He arrived in 2012 as the state of Michigan signed an agreement with the city to make certain changes in exchange for financial support. The deal fell apart and eventually led to the appointment of an emergency manager in March.
Buckfire said many city assets were considered for possible sale, but none were viable.
By spring, there were estimates that Detroit soon would be down to just $7 million, a small vein of cash in an annual budget of more than $1 billion, while payments to vendors were repeatedly delayed, Buckfire said.