[h=3]By MATTHEW DOLAN[/h]DETROIT—The incoming financial overseer of Detroit said his turnaround work could be completed in as little as six months if all of the stakeholders in the deeply troubled city work together.
Kevyn Orr, a bankruptcy attorney and partner at the law firm Jones Day in Washington, D.C., has been tapped to become Detroit's emergency financial manager, a role that will give him sole, sweeping power to map the future of the city of roughly 700,000 residents. Republican Gov. Rick Snyder announced the selection at a news conference Thursday ahead of an official nomination by a state-appointed panel later in the day.
Mr. Snyder said he picked Mr. Orr for his interpersonal skills, legal and financial acumen and a 30-year track record of work on complex corporate restructuring efforts, including the 2009 bankruptcy of Chrysler Group LLC.
"We need to move things forward," the governor said in an interview on the eve of the announcement. "We need action to get better services to citizens."
Mr. Orr said he was persuaded to take the position after meeting with Mr. Snyder, whom he described as passionate about the city's turnaround. In an interview with The Wall Street Journal, the 54-year-old lawyer called the job "the Olympics of restructuring."
Under a new Michigan law that takes effect later this month, Mr. Orr will have the ability to sell city assets, break municipal labor contracts and renegotiate terms with Detroit's creditors. Elected leaders in Detroit could lose much of their power, but Mr. Orr said he would be willing to work with those who get on board with his turnaround plan.
Mr. Orr said he wouldn't rule out a municipal-bankruptcy filing by the city—which would be the largest such filing in U.S. history—but that he thought the restructuring could be done without one.
One of the most critical issues facing Mr. Orr is finding the money to implement a revamping of Detroit's government and its mammoth financial obligations, including $14 billion in debt. In the case of Chrysler's restructuring in bankruptcy, billions of dollars of turnaround funding came from the federal government. Mr. Snyder has said that there could be targeted funding from the state, but he said, "The idea of bringing a lot of money into Detroit right now doesn't make a whole lot of sense."
The city's crisis has been decades in the making. Stymied by a flight of residents and businesses to the suburbs, reductions in state aid and a crash in real-estate values, Detroit officials borrowed heavily to cover the city's operating costs and payments on long-term liabilities, including pension and retiree health care for city workers. But even the billions in new borrowing couldn't help the city bridge its budget deficit, which now stands at $327 million.
The state's decision to take over Detroit followed months of failed attempts by Mr. Snyder and local officials to keep the city out of receivership. Last spring, Michigan and the city entered into a power-sharing agreement that involved greater oversight of Detroit's finances in exchange for financial aid from the state. But the governor said he grew alarmed in recent months after the mayor and City Council failed to move quickly to implement key terms of the agreement, even as the city came close to running out of cash.
At a hearing in Lansing, the capital, earlier this week, representatives for the Detroit City Council challenged the state's decision, arguing unsuccessfully that the city deserved more time to implement a financial-stabilization plan. But Mayor Dave Bing pointedly declined to join the appeal, saying the appointment of an emergency manager was inevitable.
In contrast to Mr. Orr's more optimistic timeline, Mr. Snyder has said he expects an emergency manager to be running Detroit for at least 18 months, with outside restructuring experts saying it could be much longer.
A native of Florida, Mr. Orr has ties to Michigan—both he and the governor obtained their undergraduate and law degrees from the University of Michigan around the same time—but not directly to Detroit. In taking the position, Mr. Orr said he would resign his partnership at Jones Day to avoid any potential conflicts of interest. His law firm, one of the nation's largest, was appointed restructuring legal counsel to the city this week.
Before joining Jones Day in 2001, Mr. Orr had stints at a Miami law firm and federal agencies including the Resolution Trust Corp., the Federal Deposit Insurance Corp. and the Executive Office for U.S. Trustees at the Justice Department.
Write to Matthew Dolan at [email protected]
Kevyn Orr, a bankruptcy attorney and partner at the law firm Jones Day in Washington, D.C., has been tapped to become Detroit's emergency financial manager, a role that will give him sole, sweeping power to map the future of the city of roughly 700,000 residents. Republican Gov. Rick Snyder announced the selection at a news conference Thursday ahead of an official nomination by a state-appointed panel later in the day.
Mr. Snyder said he picked Mr. Orr for his interpersonal skills, legal and financial acumen and a 30-year track record of work on complex corporate restructuring efforts, including the 2009 bankruptcy of Chrysler Group LLC.
"We need to move things forward," the governor said in an interview on the eve of the announcement. "We need action to get better services to citizens."
Mr. Orr said he was persuaded to take the position after meeting with Mr. Snyder, whom he described as passionate about the city's turnaround. In an interview with The Wall Street Journal, the 54-year-old lawyer called the job "the Olympics of restructuring."
Under a new Michigan law that takes effect later this month, Mr. Orr will have the ability to sell city assets, break municipal labor contracts and renegotiate terms with Detroit's creditors. Elected leaders in Detroit could lose much of their power, but Mr. Orr said he would be willing to work with those who get on board with his turnaround plan.
Mr. Orr said he wouldn't rule out a municipal-bankruptcy filing by the city—which would be the largest such filing in U.S. history—but that he thought the restructuring could be done without one.
One of the most critical issues facing Mr. Orr is finding the money to implement a revamping of Detroit's government and its mammoth financial obligations, including $14 billion in debt. In the case of Chrysler's restructuring in bankruptcy, billions of dollars of turnaround funding came from the federal government. Mr. Snyder has said that there could be targeted funding from the state, but he said, "The idea of bringing a lot of money into Detroit right now doesn't make a whole lot of sense."
The city's crisis has been decades in the making. Stymied by a flight of residents and businesses to the suburbs, reductions in state aid and a crash in real-estate values, Detroit officials borrowed heavily to cover the city's operating costs and payments on long-term liabilities, including pension and retiree health care for city workers. But even the billions in new borrowing couldn't help the city bridge its budget deficit, which now stands at $327 million.
The state's decision to take over Detroit followed months of failed attempts by Mr. Snyder and local officials to keep the city out of receivership. Last spring, Michigan and the city entered into a power-sharing agreement that involved greater oversight of Detroit's finances in exchange for financial aid from the state. But the governor said he grew alarmed in recent months after the mayor and City Council failed to move quickly to implement key terms of the agreement, even as the city came close to running out of cash.
At a hearing in Lansing, the capital, earlier this week, representatives for the Detroit City Council challenged the state's decision, arguing unsuccessfully that the city deserved more time to implement a financial-stabilization plan. But Mayor Dave Bing pointedly declined to join the appeal, saying the appointment of an emergency manager was inevitable.
In contrast to Mr. Orr's more optimistic timeline, Mr. Snyder has said he expects an emergency manager to be running Detroit for at least 18 months, with outside restructuring experts saying it could be much longer.
A native of Florida, Mr. Orr has ties to Michigan—both he and the governor obtained their undergraduate and law degrees from the University of Michigan around the same time—but not directly to Detroit. In taking the position, Mr. Orr said he would resign his partnership at Jones Day to avoid any potential conflicts of interest. His law firm, one of the nation's largest, was appointed restructuring legal counsel to the city this week.
Before joining Jones Day in 2001, Mr. Orr had stints at a Miami law firm and federal agencies including the Resolution Trust Corp., the Federal Deposit Insurance Corp. and the Executive Office for U.S. Trustees at the Justice Department.
Write to Matthew Dolan at [email protected]