DETROIT (Reuters) – Detroit will not recover, and it may not survive as a major city if its debts are not significantly reduced during bankruptcy, a city attorney told a federal judge at the start of a critical phase of the case on Tuesday.
As Detroit’s state-appointed emergency manager Kevyn Orr looked on in the courtroom, Bruce Bennett, an attorney for the city, sought to convince Judge Steven Rhodes that Detroit’s 1,034-page plan to adjust $18 billion of debt would save the city.
DETROIT (Reuters) – The key hearing on the biggest municipal bankruptcy in U.S. history started on Tuesday in a federal courtroom, where teams of attorneys began laying out arguments over Detroit’s plan to adjust $18 billion of its debt.
Detroit made history nearly 14 months ago when it filed for bankruptcy. The confirmation hearing on the city’s plan to exit bankruptcy is now scheduled to stretch through Oct. 17.
By Karen Pierog
(Reuters) – A New York-based specialty finance group is ready to loan Detroit as much as $4 billion, double its previous offer, if the bankrupt city uses the masterpieces in its art museum as collateral, according to a new proposal that surfaced this week.
Art Capital Group, which offered to loan the city $2 billion earlier this year, doubled the offer based on a recent appraisal that determined the Detroit Institute of Arts’ (DIA) collection was worth more than $8 billion.
Aug 13 (Reuters) – A federal judge on Wednesday once again
delayed the start of the key phase of Detroit’s historic
bankruptcy case, pushing it to Aug. 29 from Aug. 21.
U.S. Bankruptcy Judge Steven Rhodes on Tuesday had raised
the possibility that the confirmation trial, on Detroit’s plan
to adjust $18 billion of debt and exit the biggest-ever
municipal bankruptcy, may be delayed to allow time for the city
to incorporate a major settlement over $5.2 billion of water and
sewer revenue bonds into the plan.
(Reuters) – A federal judge could once again push back the start date for the trial on Detroit’s exit from the largest municipal bankruptcy in U.S. history after some creditors said on Tuesday a possible settlement is snarling key components of the restructuring plan.
The complicated settlement rests on a tender offer for $5.2 billion of the city’s water and sewer revenue bonds. The deadline for bondholders to tender their debt voluntarily for repurchase is Aug. 21, the same day the trial is to begin, with the final settlement possibly becoming firm weeks later, in the middle of the proceeding.
July 25 (Reuters) – Detroit released a revised debt
adjustment plan on Friday that details the role of a
post-bankruptcy monitor and sets up a reserve fund to possibly
enhance recoveries for certain creditors.
The fifth revision of the plan filed in U.S. Bankruptcy
Court creates a litigation trust related to Detroit’s lawsuit
seeking to void $1.45 billion of pension certificates of
participation (COPs) sold in 2005 and 2006.
July 25 (Reuters) – Detroit could be on the fast track to
complete the final, crucial phase of its historic bankruptcy
case, as settlements with key creditors line up and city workers
and retirees demonstrate overwhelming support for cost-saving
retirement benefit changes.
While a small, hard-core group of creditors continues to
hold out for a better deal, the support among workers and
retirees may help push through the city’s plan to adjust $18
billion of debt and exit the biggest Chapter 9 municipal
bankruptcy in U.S. history. It has moved the possibility of a
“cram down,” where a bankruptcy plan is imposed on objecting
creditors, to center stage.
(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.