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from MuniLand:

Kevyn Orr’s misinformation campaign

Detroit emergency manager Kevyn Orr appeared at Michigan’s annual Mackinac Conference, the gathering place for Michigan’s political elite. Orr (@MotownEM) had some stunning things to say:

 

 

 

from Breakingviews:

Rob Cox: Can we Grand Bargain before going bust?

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It is Kumbaya time in Detroit. The Motor City’s bankers, labor leaders and politicians are breaking into hugs and high-fiving each other for coming together on a deal that will allow the city to emerge from bankruptcy. It’s good news, of course. But it raises a worrying question about America’s political culture: Can we ever get a grand bargain before going bust?

from Stories I’d like to see:

Regrouping for Detroit, GM’s bankruptcy evasion and Chinese corporate records

1. Kevyn Orr and a Detroit rebound?

Last Friday, I happened onto a C-Span broadcast of a speech to a national group of bankruptcy lawyers given by Kevyn Orr -- the emergency manager who Michigan Governor Rick Snyder appointed to take over Detroit’s finances and guide the fallen city through bankruptcy. Since I couldn’t stand watching the Yankees get slaughtered by the Los Angeles Angels of Anaheim, I stopped on the Orr speech for a minute. I stayed 45.

I had never seen Orr speak or paid much attention to Detroit’s troubles and his efforts to dig the city out from under. But if his talk -- riveting, funny, emotional, self-effacing, forceful, fact-filled, wholly convincing and seemingly off the cuff -- is any indication, both Orr and Detroit 2014 are big national stories.

from MuniLand:

Questions over $350 million in Detroit’s pensions

Detroit’s emergency manager Kevyn Orr took a victory lap of sorts at a bankruptcy conference in Washington, D.C. The Bond Buyer reported:

Detroit's recovery will mirror the comeback of other major American cities like Miami, Washington D.C., and Cleveland, the city's emergency manager Kevyn Orr said Friday.

from MuniLand:

A bankruptcy scorecard for Detroit

Settlements in the Detroit bankruptcy case are arriving quickly. I thought that it might be useful to have a scorecard to tally the pieces. I took the chart above from the Detroit’s June 13, 2013 Proposal to Creditors (page 98). It lists the unsecured creditor claims. So far, Detroit has settled four unsecured liabilities valued at $4.107 billion for $1.213 billion, or 30 percent.

Here are four announced settlements with numerous caveats.

UTGO settlement: Detroit originally argued that the unlimited tax general obligation bonds (UTGO) were unsecured. This interpretation flew in the face of established muniland legal precedents and was watched closely by market participants. In its settlement with the bond insurers who wrapped these bonds, the city reversed its stand and agreed to acknowledge that the debt was secured by a specific lien on property tax revenues. Bond insurers will be paid 74 cents on the dollar and bondholders will be made whole by the insurers. The property tax lien will continue to be collected by the city and 26 cents on the dollar will go to a fund to help the lowest income retirees. It will cost the city $287 million to resolve $369 million in liability with the bond insurers.

from MuniLand:

Detroit’s wildly accelerating bankruptcy process

The technocratic governor of Michigan, Rick Snyder, and the emergency manager he appointed to restructure Detroit, Kevyn Orr, spoke at an event sponsored by the Manhattan Institute for Policy Research this week. Their relentless positivity contrasted with the creditor mess they had left behind in Detroit.

Orr insisted, as he has in other media appearances, that Detroit creditors must rapidly concede to proposed settlement terms so that the largest bankruptcy case in American history can be concluded. Bloomberg reported:

from MuniLand:

Did Michigan kill Detroit?

After studying Detroit’s wrecked finances for several years, it was never clear if the city has been collecting the taxes it was entitled to within the law. Now a new report from the Michigan Municipal League suggests that the state gobbled up a portion of Detroit’s share of the state sales tax, adding severe stress to an already weak budget.

I wrote last year:

Detroit has no local sales tax, according to the Michigan state website. Michigan has no city, local, or county sales tax. The state sales tax rate is 6 percent.

from Breakingviews:

Detroit turns bankruptcy precedents upside down

By Kevin Allison
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Bondholders in Detroit’s $18 billion bankruptcy must feel like they’re in a mirror universe. A restructuring plan filed by the city’s emergency manager would effectively turn bankruptcy precedents upside down by paying equity holders – in this case, ordinary Detroiters – at the expense of secured creditors. Such a shareholder-friendly approach might save the city and anoint Judge Steven Rhodes a hometown hero. But it may yet come at a market price.

from MuniLand:

How much will Detroit bondholders suffer?

 

Detroit’s proposed treatment of general obligation bondholders has turned muniland upside down. Here is what Fitch Ratings says:

from MuniLand:

Reactions to Detroit’s plan of adjustment

Detroit's plan of adjustment was filed on Friday by Emergency Manager Kevyn Orr (Plan of Adjustment Disclosure Statement):

Losers:

Retirees
Unsecured bondholders
Swaps counterparties
Bond insurers

Winners:

Detroit Institute of Art (DIA)
Various foundations contributing to save the DIA
Secured bondholders
Residents of Detroit
The state of Michigan

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