The City of Detroit has submitted in bankruptcy court a list of contracts, including hundreds with nonprofit organizations, it no longer intends to honor, the Detroit Free Press and Nonprofit Quarterly report.

The list (52 pages, PDF), which does not include dollar amounts, includes contracts with law firms and other for-profit entities, the Michigan Department of Transportation, and nonprofit organizations working to provide emergency shelter and homeless services, supportive housing services, substance abuse treatment and counseling, domestic violence prevention services, Head Start programs, services for people with disabilities, and workforce development programs. Some are small groups for whom non-payment would be devastating, NPQ reports. Nonprofits on the list include Goodwill Industries of Greater Detroit, Focus: HOPE, U-SNAP BAC, Jewish Vocational Service, Detroit Urban League, Detroit Rescue Mission Ministries, and the Arab Community Center for Economic and Social Services.

While organizations on the list can file a claim with the court for money owed them by the city, they will be eligible to receive only about 10 percent of the amount they are owed. According to the Free Press, the city plans to go before U.S. Bankruptcy Judge Steven Rhodes in August to have him authorize its plan. One person familiar with the situation told the paper that many of the contracts may be with companies that are no longer owed money, or else they would have been named as creditors in the city’s Chapter 9 case.

Doug Bernstein, a bankruptcy and creditors rights expert for the firm of Plunkett & Cooney — one of many with older contracts the city wants to cancel — told the Free Press there is nothing unusual about the city seeking to cancel contracts it no longer feels are necessary. "Rejecting executory contracts is in the ordinary course of bankruptcy," said Bernstein. "If they’re rejecting leases where the city leases offices, this is the time you do it. The landlord would have damages on the duration of the lease for the outstanding years."