Detroit leaders submit bankruptcy restructuring plan to court
The city's blueprint for how to shed billions of dollars in debt while providing basic city services to residents was filed in federal bankruptcy court today.
Your can read it here.
The plan spells out how the city plans to repay the more than 100,000 creditors – those receiving city pensions, retirees, banks, bond insurers and other creditors – can look through the plan to see how they will fare.
The bankruptcy court will now go over the plan and will likely make adjustments.
Among other things, the plan proposes what’s called a "cram down" that will force city bondholders to take big losses.
It also lays out proposed formulas to "modify" – meaning cut – city pensions.
The level of cuts will depend on a number of factors, but the plan assumes a $350 million state contribution to supplement private funds. Officials say the cuts shouldn't go beyond about 30%.
The plan also proposes transferring assets from the Detroit Institute of Arts to a private entity to avoid a possible art sale.
Again, that depends on state and private funds coming through.
Gov. Rick Snyder issued the following statement regarding the plan:
"Detroit’s comeback is underway. Emergency manager Kevyn Orr has submitted a thoughtful, comprehensive blueprint directing the city back to solid financial ground, a crucial step toward a fully revitalized Detroit. There will be difficult decisions and challenges for all sides as this process moves forward.
The state’s focus is on protecting and minimizing the impact on retirees, especially those on fixed, limited incomes, restoring and improving essential services for all 700,000 Detroit residents and building a foundation for the city’s long-term financial stability and economic growth.
This plan of adjustment is a critical step forward as we look to resolve problems decades in the making.
Let’s use this plan as a call to action for a voluntary settlement as part of the mediation process to resolve the bankruptcy more quickly and soften the tough but necessary changes. We already have witnessed some strong collaboration around innovative ideas. We hope there can be more and that these efforts come to fruition.
Detroit’s long-term viability is not just essential for its residents -- but to all Michiganders."
We'll have more as the story develops today.
*This post is being updated.