A Washington bankruptcy expert who represented Chrysler during its successful restructuring was named as the state-appointed emergency financial manager charged with helping to bring Detroit out of its fiscal morass.
Kevyn Orr, 54, was named on Thursday to the financial post by Michigan Gov. Rick Snyder. The nomination was confirmed by Michigan's Emergency Loan Board, and Orr will start March 25, the governor’s office announced.
"With this action and by working together, we can rebuild the sound financial footing needed in Detroit,” Snyder said. “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."
“We can rise from the ashes,” Orr told a news conference Thursday as Detroit Mayor David Bing looked on. “This is a beautiful city and a wonderful state that gave me my start. I feel compelled to do this job.”
As Detroit emergency manager, Orr will have broad powers to deal with all spending issues in the financially-strapped city, whose population has dramatically fallen in recent years and whose tax base has been evaporating, forcing cuts in municipal services. The appointment also makes Detroit the largest city in the United States to currently have its finances effectively under state control.
Bing and other elected leaders on the City Council will stay in their posts, but the power center will shift to Orr, who can change the city budget, sell assets and renegotiate labor contracts. He can also push the city into a bankruptcy reorganization, if he determines it is needed.
Detroit has lost about a quarter of a million residents, bringing its population to about 700,000. It has a $327-million budget deficit and there is more than $14 billion in long-term debt.
Orr said he looked forward to the challenge even though he will have to give up his post with the law firm Jones Day in Washington.
"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 in a statement at the news conference. "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 earned a bachelor's degree and law degree from the University of Michigan. He has specialized in business restructuring, financial institution regulation and commercial litigation since 1984. In 2001, he joined Jones Day, a firm with more than 2,400 lawyers covering five continents. He has also served in federal agencies including the Resolution Trust Corp., the Federal Deposit Insurance Corp. and at the Justice Department.
In perhaps his most famous effort, he represented Chrysler in its 2009 bankruptcy proceedings. Chrysler was helped by billions of dollars in turnaround money from the federal government. That aid became an issue during the 2012 presidential campaign when Republican challenger Mitt Romney argued that the Obama administration should not have helped the stricken auto industry.