Would-be creditors seek dump trucks, nuclear research from bankrupt Detroit

Tue Jun 24, 2014 6:43pm EDT

A vacant and blighted home, covered with red spray paint, sits alone in an east side neighborhood once full of homes in Detroit, Michigan January 27, 2013.  REUTERS/Rebecca Cook

A vacant and blighted home, covered with red spray paint, sits alone in an east side neighborhood once full of homes in Detroit, Michigan January 27, 2013.

Credit: Reuters/Rebecca Cook

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(Reuters) - As if it's not bad enough that Detroit acknowledges it owes its creditors $18 billion, another batch of would-be creditors says the city owes them much more, for garbage trucks worth $150 million to nuclear research materials valued at an alleged $1 trillion.

The city disputes those claims - along with several others scheduled for a hearing on Wednesday before U.S. Judge Steven Rhodes, who is presiding over Detroit's bankruptcy.

The biggest municipal bankruptcy case in U.S. history is chock full of more customary creditors: city unions and pension funds, bondholders and businesses. But on Wednesday, Detroit's attorneys will ask Judge Rhodes to disallow claims from creditors who have not provided evidence to back up their demands.

For example, Albert O'Rourke of Oceanside, California, in February filed the claim for $1 trillion. He claimed the city had lost or destroyed "Manhattan Project" nuclear research materials housed in property he owns in Detroit. The amount is based on the price tag for building various nuclear weapons and devices related to the missing materials, O'Rourke's filing stated.

City lawyers have no choice but to take such claims at face value and respond in sober, lawyerly prose.

"Based on the information in the claim and response, the city cannot even determine what the materials are, whether they exist, where they are located and if they exist, who owns them," Detroit said in a June 20 court filing objecting to O'Rourke's claim.

A claim filed by Rickie Allen Holt on behalf of the Aboriginal Indigenous Peoples wants $7 billion in damages because Detroit failed to secure the peoples' "expressed permission" to file for Chapter 9 municipal bankruptcy in July 2013.

Detroit resident Lucinda Darrah in February claimed the city owes her $150 million for the purchase of garbage trucks so residents can manage their own trash disposal. In a hand-written response earlier this month to the city's objection to her claim, Darrah increased the demand to $450 million, to compensate her for harmful pollution from a city incinerator.

Not all of the claims run to the hundreds of millions of dollars and beyond. One filed by Detroit resident Edward Gildyard seeks a tidy $2 million for "services performed," without elaboration.

Adam Woodberry wants $1 million because the "city took real property without paying just compensation."

Wednesday's hearing comes as Detroit's case heads toward the Aug. 14 start of hearing during which the city will defend the fairness and feasibility of its plan to exit bankruptcy after adjusting $18 billion of debt.

Or perhaps considerably more than that amount, depending on how Judge Rhodes rules.

(Reporting by Karen Pierog; Editing by David Greising and Dan Grebler)

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