(Reuters) – Detroit’s city workers and retirees overwhelmingly agreed to accept the city’s debt adjustment plan, according to results filed late Monday, potentially clearing the way for the struggling city to exit bankruptcy in the next few months.
Documents filed in U.S. Bankruptcy Court show the city’s current and retired police and fire employees, along with other active and retired city workers, will accept pension reductions to help adjust $18 billion in debt in the largest-ever U.S. municipal bankruptcy case. Most bondholders rejected the plan, along with insurers backing some of the debt.
July 21 (Reuters) – Detroit’s plan to adjust $18 billion of
debt and exit the biggest municipal bankruptcy in U.S. history
is feasible, according to an expert witness report that also
expressed concern that the costs of its rapid restructuring may
hurt the city’s ability to fix its “broken operations.”
Martha Kopacz, a senior managing director at Phoenix
Management Services in Boston, who was chosen by U.S. Bankruptcy
Judge Steven Rhodes in April as an expert witness in the case,
concluded in her July 18 report obtained by Reuters on Monday
that the plan’s revenue, expense and payment assumptions are
By Karen Pierog
(Reuters) – The Detroit Institute of Arts collection may be worth as much as $4.6 billion, but a sale of art works would raise less than $2 billion to pay the bankrupt city’s creditors, according to a report released on Wednesday.
Michael Plummer, an art expert hired by the institute and the city to evaluate the collection and ways to raise cash from it, concluded that litigation and market conditions would depress prices. Liquidating the most valuable works would eventually force the museum to close, in his opinion.
June 26 (Reuters) – Bond insurer Syncora Guarantee Inc has
emerged as Detroit’s chief nemesis in the city’s historic
bankruptcy case and is fighting as if its financial life depends
on a decent recovery on its $400 million exposure to the city.
Since Detroit filed the biggest municipal bankruptcy in U.S.
history last July, Syncora has objected to the city’s moves
nearly every step of the way – from an early agreement with
investment banks over interest rate swaps to the more recent
“grand bargain” designed to save the Detroit Institute of Arts.
WASHINGTON/CHICAGO (Reuters) – New Jersey, which revealed a massive budget shortfall this week, is far from alone in feeling the pinch of lower income tax revenues in the key month of April, a Reuters analysis shows.
Personal income tax collections plunged last month from a year earlier in 27 of 32 states for which Reuters was able to collect data. That’s most of the 43 states that levy income taxes, and drops were as high as 50 percent.
CHICAGO (Reuters) – An Illinois judge on Wednesday suspended the state’s new pension reform law until lawsuits brought by unions, retirees and others challenging the constitutionality of the overhaul of the retirement system are resolved.
“This law is going no place until there is a final resolution on the merits (of the lawsuits),” said Don Craven, an attorney who filed a lawsuit against the law on behalf of the Illinois State Employees Association Retirees.
WASHINGTON/CHICAGO (Reuters) – A top U.S. Federal Reserve official on Thursday called on regulators to revamp a variety of new bank rules, including the way capital minimums are set for big firms and exempting mid-sized banks from some rules.
Fed Governor Daniel Tarullo, the Fed’s point person on financial regulation, said a “rationalization” of some rules would reduce costs for banks but still achieve the goals of the 2010 Dodd-Frank Wall Street oversight law.
By Karen Pierog
(Reuters) – A committee created by a U.S. bankruptcy court to represent Detroit’s retired workers said on Friday it reached an agreement in principle with the city over pensions and healthcare.
The agreement, subject to documentation, would permit the committee to support Detroit’s plan to adjust $18 billion of debt and exit the biggest municipal bankruptcy in U.S. history, according to a statement issued by Dentons, the committee’s law firm.
(Reuters) – The board of Detroit’s General Retirement System on Wednesday approved economic terms of a settlement with the city that include cuts to pension benefits, putting in place another key component of Detroit’s effort to exit bankruptcy by October.
The city also has reached a tentative pact with the city’s other pension fund, the Detroit Police and Fire Retirement System, whose board is expected to vote later this week. Together, the two pension funds represent some 23,000 active members and retirees.
By Karen Pierog
(Reuters) – Detroit reached its first deal with a retired workers group on Tuesday over pension and healthcare benefits and was close to a deal with its two pension funds, giving a major boost to the city’s plan to exit bankruptcy in October.
Momentum for the city’s plan to adjust its $18 billion debt burden was building after Detroit last week won court approval for a crucial settlement over interest rate swaps and reached an agreement with bond insurance companies over the treatment of voter-approved general obligation bonds.