Karen's Feed
Mar 1, 2014

Detroit creditors want more time to vet city’s bankruptcy plan

By Karen Pierog

(Reuters) – Detroit faces a long legal fight over its valuable art collection and other key matters in its historic bankruptcy case that make it imperative to push back the start of a trial on the city’s debt adjustment plan, a bond insurer argued on Friday.

In a filing in U.S. Bankruptcy Court, Syncora Guarantee Inc warned that lawsuits will be filed over the Detroit Institute of Arts’ collection, which the city is not selling at this point to help pay its $18 billion in debt.

Feb 27, 2014

Chicago not poised to go the way of Detroit -S&P

CHICAGO, Feb 27 (Reuters) – Standard & Poor’s Ratings
Services posed the question on Thursday that has been lingering
in the minds of many in Chicago: Will significant budget
pressures put the city on the same path that led Detroit into
bankruptcy?

The answer, contained in a report by the credit rating
agency, is no.

“We believe that Chicago’s growing economy and taxing
flexibility provide it with the resources to avoid a fate
similar to Detroit’s should it capitalize on this flexibility
and remain on course,” the report concluded.

Feb 26, 2014

Analysis – Detroit uses stick and carrot to sell bankruptcy plan

By Karen Pierog and Tom Hals

(Reuters) – In his effort to keep Detroit on a fast track to end its historic bankruptcy, the city’s emergency manager has cobbled together a plan to cajole or even threaten key creditors to accept cuts he laid out in federal court filings last week, or else face even deeper losses if they do not cooperate.

Kevyn Orr has every incentive to keep the parties in line. If he wins broad agreement with creditors, the city will gain access to some $815 million pledged by foundations and others to ease the bankruptcy blow on city retirees. Even so, his plan for dealing with Detroit’s $18 billion of debt may drive a wedge between city workers and retirees and their unions and pension funds.

Feb 26, 2014

Detroit uses stick and carrot to sell bankruptcy plan

By Karen Pierog and Tom Hals

(Reuters) – In his effort to keep Detroit on a fast track to end its historic bankruptcy, the city’s emergency manager has cobbled together a plan to cajole or even threaten key creditors to accept cuts he laid out in federal court filings last week, or else face even deeper losses if they do not cooperate.

Kevyn Orr has every incentive to keep the parties in line. If he wins broad agreement with creditors, the city will gain access to some $815 million pledged by foundations and others to ease the bankruptcy blow on city retirees. Even so, his plan for dealing with Detroit’s $18 billion of debt may drive a wedge between city workers and retirees and their unions and pension funds.

Feb 22, 2014

Detroit’s bankruptcy plan spares pensions from deepest cuts

By Karen Pierog

(Reuters) – Detroit’s blueprint for dealing with $18 billion in debt and emerging from municipal bankruptcy requires cuts to worker pensions and even deeper cuts for bondholders, setting the stage for a new round of negotiations and court challenges.

The potentially precedent-setting plan the city filed in U.S. Bankruptcy Court on Friday would cut retired worker’s pensions by up to 30 percent while owners of bonds deemed unsecured would lose up to 80 percent of their investment.

Feb 21, 2014

Detroit files plan to resolve record bankruptcy

Feb 21 (Reuters) – Detroit filed a much-anticipated
blueprint for dealing with $18 billion of debt in U.S.
bankruptcy court on Friday that includes cuts of as much as 80
percent for some unsecured bondholders.

The city’s plan of adjustment, which the court must approve
before Detroit can emerge from the biggest municipal bankruptcy
in U.S. history, also calls for a $1.5 billion program to
improve essential services and public safety over 10 years.

Feb 19, 2014

Detroit bankruptcy judge to hear crucial bond dispute

Feb 19 (Reuters) – For Detroit, the long and winding road
out of the largest-ever U.S. municipal bankruptcy may get a bit
straighter on Wednesday.

First, U.S. Bankruptcy Judge Steven Rhodes will consider
litigation over whether Detroit’s pledge of tax revenue to pay
off voter-approved bonds is a binding obligation or merely a
promise that the broke city cannot keep.

Feb 17, 2014

Detroit bankruptcy bond fight a watershed for muni market

By Karen Pierog and Tom Hals

(Reuters) – The city of Detroit’s effort to declare some of its general obligation bonds as unsecured debt will be challenged in bankruptcy court Wednesday in what could be a precedent-setting turn in the largest-ever municipal bankruptcy in U.S. history.

The issue in front of federal bankruptcy Judge Steven Rhodes is whether a pledge of Detroit tax revenue to pay off the voter-approved bond issues is a binding obligation under Michigan law, as argued by bond insurers in two lawsuits, or merely a promise.

Feb 5, 2014

Illinois to sell $1 bln bonds, but investor concerns linger

CHICAGO, Feb 5 (Reuters) – A looming revenue decline, heaps
of unpaid bills and multiple lawsuits hang over Illinois’
planned $1 billion bond sale on Thursday, though the
fiscally-challenged state’s recent pension reform law may afford
it a modest break on borrowing costs.

Though it still pays more than any other state, Illinois saw
its 10-year borrowing premium slip to 120 basis points over
top-rated municipal bonds in recent weeks, down from more than
170 basis points late last year.

Feb 1, 2014

Detroit files lawsuit seeking to void pension debt

Jan 31 (Reuters) – Detroit on Friday filed a lawsuit in U.S.
bankruptcy court seeking to invalidate $1.44 billion of debt
sold to fund public worker pensions – a move that also could
void the ill-fated interest-rate swaps contracts that were a
factor leading Detroit into bankruptcy.

The lawsuit contends the city and its retirement systems
violated Michigan law when they set up “sham” service
corporations and funding trusts to facilitate the debt sales in
2005 and 2006. All other contracts or obligations connected to
the debt are also void, the lawsuit claims.