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Posted by: Maricopa Lawyers on Aug 8, 2013

Detroit’s emergency manager stated Wednesday that the city should be able to emerge from bankruptcy before his term expires in October 2014, and hopefully without having to borrow new money.

Despite this voice of confidence, Kevyn Orr, the bankruptcy expert who was appointed in March to a post that gives him almost unlimited power over Detroit’s finances, warned that the path back to financial health will have its fair share of obstacles.

If the city wins court approval to proceed with its chapter 9 bankruptcy filing it made last month, virtually all of Detroit’s creditors will see payments of their bonds reduced, Orr said.

“We may need a little bit of cash, or we may be able to stay cash-flow free-and-clear without borrowing anything for the purposes of the bankruptcy,” Orr told multiple news sources in a wide-ranging interview. “The schedule we’re on, we should be able to get this done in 14 months, so I don’t anticipate a need for me to stay on.”

Orr also said that investors in the city’s general obligation bonds will be required to accept reduced payments as part of the bankruptcy process. General obligation bonds, which are backed by tax revenue, have long been considered the safest form of municipal debt.

Detroit currently faces a staggering $18.5 billion in long-term debt. U.S. Bankruptcy Judge Steven Rhodes will decide the state’s eligibility for Chapter 9 protection in a trial slated to begin on October 23. Orr has surmised that the bankruptcy filing should be approved.

The city stated on Monday that it has hired famed auction house Christie’s to appraise the city-owned portion of the Detroit Institute of Art’s $60,000=piece collection, a move that Orr said was mostly to determine  the value of the collection.