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Here’s a memo that I sent off to a few staff members today that we figured we should share with everyone:
In the last couple of days we’ve referred to bankruptcy in the following ways:
• “going belly up”
• “haunting specter”
• “worming its way” back into the discussion
This is going to be a major issue this city continues to deal with in the long term so I want to explain it a bit more and change the way we refer to it. Bankruptcy is a very misunderstood process.
It’s often characterized as the failure or the admittance of failure. In actuality, it’s one way of dealing with a failure you incurred long before seeking bankruptcy protection. Going into bankruptcy is not going belly up. Going belly up is dying. Bankruptcy is one legal, organized process for resolving the problems very precisely so that you do not die — so that you have a viable plan for living on into the future.
It’s a process whereby you reorganize your debt, find ways to raise revenue and, if it works correctly, you come out much better off than you were beforehand. GM, for example, went broke. There are a number of different ways it could’ve dealt with that. It made headlines because it chose to go into bankruptcy and to the common person that’s the mark of failure. In actuality, it had failed over the last 30 years and now was seeking a remedy to the failure.
I’m not arguing that bankruptcy for the city is the right path. Or that it’s not extreme and harsh and risky. But there has been so much mischaracterization of it in the press and by politicians over the last six years that it’s forced us to exclude as a community one legitimate discussion point for resolving our major financial issues. It’s often treated as if it is the cancer. In reality, it’s one way of dealing with cancer. It’s a harsh chemotherapy, one that no doubt has side effects and needs to be considered with care. But we do a disservice if we act like bankruptcy itself is the cancer.
To be clear: This isn’t an argument for bankruptcy, but rather for modifying how we treat the concept. It’s pretty raw still so challenge me on it.