The man who has become the face of Detroit’s historic bankruptcy planned to spend his weekend at home in Chevy Chase corralling the ferns that are overgrowing their planters and threatening his garden. Or maybe taking his two young children to the pool.
Long anonymous to most of Washington, Kevyn D. Orr is among a tiny handful of prominent African American corporate turnaround lawyers in the country. Until recently, he was perhaps best known for helping guide Chrysler through its wrenching but ultimately successful 2009 bankruptcy.
Now Orr has rocketed to national prominence for his lead role in trying to free Detroit from at least $18 billion in debt. He is also charged with restoring basic services that have eroded to dangerous levels during the Motor City’s six-decade descent from industrial capital to urban basket case.
His decision last week to file the largest municipal bankruptcy in the nation’s history has triggered anger among the city’s creditors as well as its 9,700 employees and 20,000 retirees, who stand to lose money and benefits. It also sent ripples of concern through financial markets worried that other distressed cities and towns could follow Detroit’s lead.
Orr said bankruptcy offers the best hope for the kind of renewal he envisioned for Detroit in March when he left his cushy job as an on-the-rise partner at Jones Day, a global law firm, to serve an 18-month term as the $275,000-a-year emergency manager for Detroit.
“Frankly, initially I did not want the job,” Orr said. “But my managing partner, my friends and my wife convinced me that at various times in your life there are calls to action and you have to answer that call. What was really going through my mind was that this is a storied city in America that is deserving of a fresh start.”
As important, Orr felt that he was one of just a few people with the right skills and the right biography for the job. “I am a restructuring professional,” he said in an interview. “I happen to be an African American restructuring professional, for a city that is 83 percent African American. And I’m just one of a handful in that cohort who has done these kinds of high-profile representations.”
Orr, 54, felt connected to the region — he attended both undergraduate and law school at the University of Michigan, which is about 45 minutes from Detroit. And as the son of Ft. Lauderdale-area educators who were active in that area’s civil right struggles in the 1960s, he felt a duty to serve its people.
“The real issue is, how do we get the city to the point where residents can expect the police to respond in shorter than 50 minutes?” Orr said. “How do we get the city to the point where the mortality rate for cardiac arrest isn’t 100 percent in the first 45 minutes?”
The job gave Orr extraordinary power to run Detroit. He can tear up contracts, hire and fire workers and liquidate city assets. It also put Orr in the crosshairs of some of Detroit’s civil rights and political leaders, who saw the state-mandated emergency manager role as an undemocratic, and maybe unconstitutional, taking of power. For them, it was the latest incarnation of the long-standing racial polarization separating mostly black Detroit from the rest of Michigan.
Some retiree representatives complain that Orr has used calculations that overstate the city’s pension liability. That, they say, could result in substantial benefit cuts to free money for city improvements. “It seems like they are going to take money from retirees to repair and tear down houses,” Donald L. Taylor, president of the Retired Detroit Police and Firefighters Association. “I don’t know how appropriate that is.”
Orr has been acutely aware of such perceptions, and has attempted to alter them by using the same skills that have propelled him throughout his highly successful legal career: be an open and honest broker, but one who persuaded only by facts.
“He has taken on this job in a straightforward fashion,” Gov. Rick Snyder (R), who appointed Orr, said in an interview. “This is not about race. Of course, you always need to be sensitive to racial issues. But he has very much approached the job from a factual basis to say, ‘Here are the problems and here are the logical paths to solve those problems.’ ”
Among Orr’s earliest actions as emergency manager was to restore the pay and benefits that had been slashed for Detroit city officials. Then he met with city leaders to hear their concerns, and ideas, making it clear that he did not see himself as a potentate. The approach has earned him grudging support.
“I did not want an emergency manager in Detroit from the beginning,” said Detroit City Councilman Andre L. Spivey. “But if we had to receive someone, I think Kevyn has been an excellent choice. He is a very smart guy who knows what he is doing and I think he has a genuine interest in helping the city of Detroit.”
His work is also being applauded by some of the city’s biggest economic boosters, who say Orr is finally confronting its dizzying problems.
Matthew P. Cullen, president and chief executive of Rock Ventures, a company that has invested heavily in downtown Detroit, has met with Orr on several occasions.
“He is very pragmatic, very factual, but also empathetic,” Cullen said. “I think the people in the city get that and they feel that.”
Orr’s approach to the monumental task he faces in Detroit does not surprise his former colleagues at the Washington office of Jones Day, where he worked from 2001 until resigning earlier this year.
“Kevyn is as impressive an individual as you will ever come across,” said Gregory M. Shumaker, the partner in charge of the Jones Day 250-person Washington office. “He is incredibly smart, wonderfully engaging. And he obviously has tremendous integrity, as I think he has shown over these past months in Detroit.”
Orr’s first job after graduating law school in 1983 was with a Miami firm now known as Stearns Weaver Miller, where he was mostly a litigator and made partner. In 1991, he moved to the deeper legal waters of Washington, to work for Federal Deposit Insurance Corp., before later transferring to the Resolution Trust Corp., the government entity established to quell the savings and loan crisis. His duties there included serving as the agency’s top lawyer for the Whitewater investigation related to the failure of the Madison Guaranty Savings and Loan, in Little Rock, Ark. For years, allegations related to Whitewater dogged former president Bill Clinton, who was never implicated in any wrongdoing.
Orr later worked at the Justice Department’s Executive Office for United States Trustees, which oversees restructuring and liquidation matters under federal law.
In 2001, he moved to Jones Day, a law firm that now has 2,400 lawyers in 40 countries. He was preparing to open and head a Miami office for the firm when he was hired to be Detroit’s emergency manager.
Shortly after his appointment, it was revealed that Orr had failed to pay more than $15,000 in child care-related taxes, which resulted in liens being placed on his $1 million Chevy Chase home. After the revelation surfaced, Orr quickly paid the tab, calling it an embarrassing oversight. Previously, he had paid more than $16,000 in liens.
The problem barely slowed his roll. Since coming to Detroit, he spends weekdays living in the Westin Book Cadillac Hotel, a once neglected landmark that was reopened in 2008.
First he organized scores of meetings, getting to know the city and its people. He then set about documenting the city’s stunning list of problems, including hour-long police response times, 11,000 arsons a year and an alarming decline in population and revenue, topped by the massive debt.
Now comes the hard part: trying to win concessions from creditors and pensioners. His first offer, which would pay bond holders pennies on the dollar and lead to unspecified benefit cuts for pensioners, was answered with a flurry of lawsuits. That led him to file for bankruptcy, where a federal judge will oversee restructuring negotiations. Orr’s ambitious goal is to have an agreement in place by the time his term ends in 15 months.
Some have speculated that Orr, a Democrat, could be harboring political ambitions, given his work in Detroit — which he scoffs at. He says he plans to return to private life and private practice once his time in Detroit is up.
“I am a private sector guy who has taken a hiatus to come and do this job that I think is long overdue,” Orr said. “Michigan is my adopted state . . . and I felt some obligation to give back. But this is not a springboard to anything political by any stretch of the imagination.”