Snyder Confirms Financial Emergency in Detroit, Orr Appointed EFM
On Thursday, Gov. Rick Snyder confirmed his determination that a financial emergency exists in the city of Detroit and assigned management of the emergency to the Local Emergency Financial Assistance Loan Board (ELB), pursuant to Public Act 72 of 1990. The ELB named Kevyn Orr as emergency financial manager, effective March 25, in a meeting held in Lansing this afternoon.
“After thoroughly reviewing the information presented in Tuesday’s hearing, I remain convinced that a financial emergency exists in Detroit,” Snyder said. “With this action and by working together, we can rebuild the sound financial footing needed in Detroit. The extensive experience that Kevyn Orr has in working to turn around financially troubled organizations will serve the citizens of Detroit well. He will bring a fresh, objective look at Detroit’s finances that is needed to end this financial crisis which has been more than a half-century in the making.”
Snyder said Orr’s three decades of experience in restructuring financially distressed businesses in diverse industries makes him the best candidate to restore Detroit to financial stability and put the city on a path to future growth.
“I am deeply saddened to see a historic city such as Detroit in severe financial distress, but I am confident we can and will put the city back on the path to success,” Orr said. “I look forward to working with Mayor Bing, City Council, citizens and all stakeholders, including city employees and businesses, and faith and philanthropic communities, to find effective solutions resulting in long-term prosperity for all.”
Orr has Michigan ties, earning both a bachelor’s degree and law degree from the University of Michigan, and has practiced in the areas of business restructuring, financial institution regulation and commercial litigation since 1984. In 2001 he joined Jones Day, a global legal institution with more than 2,400 lawyers covering five continents. He specializes in assisting organizations experiencing severe financial trouble, ensuring that they were brought to proper resolution, including representing Chrysler in all aspects of its 2009 bankruptcy and restructuring. He also is the firm’s partner for hiring and diversity and serves on its advisory committee.
Prior to joining Jones Day, Orr spent five years in the U.S. Department of Justice, rising to the role of director of the United States Trustees Program where he ensured the integrity of the bankruptcy system while protecting the rights of all parties. He previously served as assistant general counsel for Complex Litigation and Bankruptcy at the Resolution Trust Corp. in Washington, D.C.; as a litigator for the Federal Deposit Insurance Corp.; and was a partner in the Miami-based law firm of Stearns, Weaver, Miller, Wiessler, Alhadeff & Sitterson. He is a member of the bar in Florida and the District of Columbia and is a member of the American Bar Association and American Bankruptcy Institute.
A preliminary review of the city’s finances, conducted last fall, found that a “serious financial problem” existed in Detroit as a result of several issues. An independent, six-member financial review team, appointed by Snyder on Dec. 18, 2012, concluded unanimously Feb. 19 that a financial emergency exists in Detroit and that no satisfactory plan is in place to overcome the city’s fiscal crisis.
Orr will begin on Monday, March 25, and will work with Detroit officials and seek citizen input to create a written financial plan that will set a blueprint for solving the financial emergency. He will assume the powers prescribed by Acts 72 and 436, and will be responsible for administering all actions necessary to carry out the written financial plan.
A new public act governing financial emergencies, Public Act 436 of 2012, will take effect March 28. All current EFMs, including Orr, will transition to emergency managers and continue to work under the guidelines of the new act.
For more information on the emergency financial manager and Detroit’s financial emergency, visit www.detroitcantwait.com.