grand bargain

Detroit won’t be quite ready to exit bankruptcy until next month, city lawyers told Judge Steven Rhodes at a hearing Monday.

Judge Rhodes has already approved the city’s bankruptcy restructuring plan. But the city must still complete a couple steps before it officially leaves Chapter 9.

It needs to make sure its two-year budget reflects the plan’s terms, and release details of the plan to financial markets.

The group tasked with making sure post-bankruptcy Detroit stays solvent met for the first time Wednesday.

The nine-member Detroit financial review commission will serve as the last word on the city’s financial decisions for at least three years.

The panel will review and approve all city budgets, major contracts and collective bargaining agreements during that “control period.”

Sarah Cwiek / Michigan Radio

Having secured court approval for its bankruptcy restructuring last week, Detroit is now ready to emerge from bankruptcy.

But some Detroit residents and activists say that plan sacrificed both democracy and the public interest.

The group Detroiters Resisting Emergency Management says the bankruptcy process was about imposing financial solutions on social and political problems.

And they believe the newly-approved “plan of adjustment” won’t benefit the vast majority of Detroiters.

Detroit’s bankruptcy trial wrapped up Monday with closing arguments.

At issue: whether the city’s plan of adjustment to restructure its debt is “fair and equitable” to its various creditors, as required by Chapter 9 of the municipal bankruptcy code.

Judge Steven Rhodes must also decide if the plan is “feasible”—whether Detroit can balance its books and avoid slipping back into bankruptcy.

The Detroit Institute of Arts
Flickr

A New York lender called Art Capital Group is offering a $4 billion loan to the city of Detroit if it puts up its art collection as collateral.

Detroit News business columnist Daniel Howes said the city would be wise to pass on this offer.

The proposal is being backed by holdout bond insurers Syncora, and the Financial Guaranty Insurance Company.

Howes said the proposal would put DIA art one step closer to being sold, pensioners would receive a lot less money, and the loan would be spread around to other creditors.

Howes said city officials said they were not interested in discussing the deal, and that they say they will stand behind the "Grand Bargain" because it is money in hand and the deal will help avoid legal issues.

Howes also said the offer is just now coming up to stall the bankruptcy trial.

Read Howes column in the Detroit News here.

*Listen to the full interview with Daniel Howes above. 

Detroit retirees voted overwhelmingly to approve emergency manager Kevyn Orr's plan of adjustment.

That plan includes the unprecedented "grand bargain"--a mixture of public and private funds that will minimize cuts to city pensions, while protecting the Detroit Institute of Arts' assets from other city creditors.

But retirees aren't the only group of creditors who voted on the plan. Other groups did as well--and not all voted "yes."

Detroit Institute of Arts

The proposed "grand bargain" that would soften the blow to Detroit pensioners while preserving the city's art collection has cleared a major hurdle.

That's because city retirees have voted for the plan by an overwhelming margin.

As city creditors, pensioners got to cast ballots for or against emergency manager Kevyn Orr's bankruptcy restructuring. The grand bargain is an integral part of that plan of adjustment.

We should know how Detroit retirees voted on the proposed “grand bargain” later today.

City pensioners had until July 11th to vote on the city’s bankruptcy restructuring plan, formally known as the “plan of adjustment.”

The grand bargain is just one part of that plan.

It would use more than $800 million in combined state and private foundation dollars to backstop city pension funds, minimizing retiree losses.

Detroit skyline.
user JSFauxtaugraphy / Flickr

Tomorrow afternoon at 4:06 is the one-year anniversary of the largest municipal bankruptcy in American history.

Detroit News Business Columnist Daniel Howes has been talking with top business leaders in Detroit for a "temperature check" on how this first year has gone.

He said that the kind of leadership and coalescence that happened in the past year was something he’s never seen before in this community.

Detroit Institute of Arts

The Detroit Institute of Arts is closer to fully funding its portion of the “grand bargain.”

The museum announced $26.8 million in additional corporate pledges today on Wednesday.

8 companies announced contributions. The Penske Corporation led the way with a $10 million donation, while both Quicken Loans/Rock Enterprises and DTE Energy chipped in $5 million.

Sam Beebe

Today was the deadline for Detroit retirees to vote on the city’s bankruptcy restructuring plan, known formally as a “plan of adjustment.”

The California firm tallying the votes had to receive them by today.

All creditors get to vote on the plan of adjustment. But pensioners’ votes are particularly key—especially when it comes to the future of the “grand bargain.”

That’s the deal to use more than $800 million in public and foundation money to minimize pension cuts, and protect the Detroit Institute of Arts’ collection from being sold to pay off creditors.

The Detroit Institute of Arts
Flickr

A new appraisal of the Detroit Institute of Arts' collection has found the works could be worth between $2.7 billion and $4.6 billion dollars. That's a big difference from the $867 million value that Christie's put on the collection last fall.

Detroit News Business columnist Daniel Howes joined us to tell us what he saw in the evaluations.

Howes clarified that the $867 million valuation by Christie’s only looked at 5% of the DIA’s collection, whereas the new appraisal evaluated its entire collection. He also pointed out the caveat attached to the big $4.6 billion number: “If you try to sell big chunks of the collection at the same time, you likely press the prices dramatically.”

Sarah Cwiek / Michigan Radio

The clock is ticking.

Detroit's bankruptcy settlement has gotten through the State Legislature and the private foundations. Now it's all up to 32,000 city employees and retirees.

They're being asked to say "yes" to having their pensions cut, and promising not to sue the city.

In return, the pension cuts will not be as severe as they would be under what's become known as the Grand Bargain.

Michigan Radio's Detroit reporter Sarah Cwiek joined us on Stateside. She explained the transparency issue surrounding the voting process, what the different classifications of retirees mean, and what we should keep our eyes on, during next week leading up to the July 11th deadline.

*Listen to full interview above.

It’s been almost six months since Mike Duggan took over as mayor of Detroit. He took over a city however, run by someone else: state-appointed Emergency Manager Kevyn Orr.

But, that doesn’t mean Duggan has been denied all the rites of passage of the job including the schlep to Lansing to ask the state Legislature for something. Every mayor has to do it. And Duggan had to go to Lansing with a really big ‘ask.’ We’re talking about the $195 million dollar rescue package for his city (that’s right, ‘rescue,’ ‘settlement.’ Just don’t call it a ‘bailout.’)

Getting the Republican-led state House and Senate to go along with sending almost $200 million dollars to a Democratically-controlled city was not an easy task.

Michigan Attorney General Bill Schuette is jumping in the fight to prevent one of Detroit’s major creditors from accessing the personal financial records of city retirees.

Bond insurer Syncora Guarantee Inc. is on the hook for hundreds of millions of dollars if Detroit’s plan for exiting bankruptcy moves forward.

The Detroit Institute of Arts
Flickr

Detroit automakers say they will give $26 million to the Detroit Institute of Arts, to go toward toward the "grand bargain," an effort to hasten Detroit's trip through bankruptcy.

Ford and General Motors will each contribute $10 million and Chrysler offered $6 million.

How the money will be distributed, whether in a lump sum or over the course of 20 years, is still in the air. The DIA says it will raise $100 million toward the grand bargain, and that it has already secured commitments for $70 million

Michigan Radio’s Detroit reporter Sarah Cwiek says automakers and auto families have a long history of supporting the DIA. Cwiek also says there is a subtle, but persistent, expectation that the automakers will contribute because they got a helping hand in the past.

Pensioners are voting whether they want the grand bargain; Cwiek says its not clear if the automakers' contributions will have any effect on the votes. 

*Listen to full interview above. 

Surprisingly, perhaps, the so-called 'grand bargain' to solve Detroit’s bankruptcy sailed through the Legislature.

Now, there is nothing to do but wait.

Remember election nights in the old days, and staying up all night to find out who had won?

Well, we’ve got something like that again where Detroit is concerned, except this election night will last more than a month.

The Detroit bankruptcy settlement now depends on the votes of 32,000 city workers and retirees. We won’t know the final result until July 11 or later. These folks are being asked to agree to have their pensions cut, and promise not to sue.

Many retirees are also being asked to pay back some annuity savings money they were improperly credited with.

user paul (dex) / Flickr

This Week in Review, Jack Lessenberry and Rina Miller discuss General Motor's CEO Mary Barra's response to the investigation of the faulty ignition switch recalls, what happens now for Detroit after the state agreed to give the city $195 million, and an update on road funding.


via Detroit Institute of Arts

The city of Detroit moved to finalize its end of the “grand bargain” Thursday, as the Detroit City Council voted to transfer the Detroit Institute of Arts’ assets to a public trust.

This week, Lansing lawmakers approved $195 million toward the $816 million grand bargain – a linchpin of Detroit’s bankruptcy restructuring plan.

(photo by Steve Carmody/Michigan Radio)

It was a big win for Detroit's bankruptcy struggle when the state Senate approved that $195 million rescue package earlier this week. That vote "sealed the deal" on the state's piece of the so-called "grand bargain."

But is the complicated and precarious deal a reality yet?

As Detroit News business columnist Daniel Howes explained on the show today, the answer is "no."

*Listen to the full interview above. 

gophouse.com

Gov. Rick Snyder says he will sign bills giving almost $200 million to Detroit’s bankruptcy settlement, after the state Senate approved the measures yesterday.

Rick Pluta is the Lansing Bureau Chief for the Michigan Public Radio Network.

He spoke with Stateside, and said the grand bargain is not a done deal. The game changer he said, is Judge Gerald Rosen.

Rosen explained the deal to lawmakers, saying the numbers were not just random. Although some Republicans still voted against most of the bills, Pluta said the explanation gave Republicans enough comfort to pass the bargain on.

Pluta said there is a possibility of a lawsuit by the city's pensioners. If the deal fails , the state could end up in court, and if they lose, the state could be held accountable for the money the pensioners lost.

Also, Steven Henderson, editorial page editor for the Detroit Free Press, spoke with Stateside. He said Gov. Snyder will sign the bill, but it’s only one part of the whole puzzle.

Henderson said the only thing left is the vote of the pensioners. Henderson said pensioners are still on the edge of their decision, and many are still not excited about taking a cut. 

*Listen to full interview above. 

- Bre'Anna Tinsley, Michigan Radio Newsroom.

Yesterday was largely a good news day for our state, and how often can you say that?

The really big news, of course, was the state Senate’s remarkably fast passage of the so-called "grand bargain," the deal that gives Detroit a chance to emerge from bankruptcy without threatening the city’s art museum or utterly destroying the lives of the retirees.

And, in a development understandably overshadowed, the U.S. Coast Guard finally issued a permit for the building of the New International Trade Crossing bridge, meaning all that’s left now is for Washington to come up with money for the customs plaza.

That will be essential for Michigan’s economy in the future.

Detroit skyline.
user JSFauxtaugraphy / Flickr

This Week in Michigan Politics, Jack Lessenberry and Christina Shockley discuss how lawmakers approved giving $195 million to Detroit, the state of the United Auto Workers after members agreed to raise fees for the first time in nearly 50 years, and why lawmakers can't agree on road funding. 


Detroit Institute of Arts

The Detroit Institute of Arts is firing back at creditors who say the city should use the museum’s assets to pay them off.

The DIA filed a formal objection to those creditors in bankruptcy court this week, just as city lawyers acknowledged an ongoing effort to put a price tag on the museum’s entire collection.

Detroit Mayor Mike Duggan says he “completely supports” the Detroit aid package being debated in Lansing, despite the conditions attached to it.

The 11-bill package would put $195 million in state funds toward the $816 million “grand bargain:” a deal to smooth Detroit’s trip through bankruptcy by minimizing cuts to retiree pensions, and shielding the Detroit Institute of Arts’ assets from city creditors.

The Michigan House of Representatives.
Lester Graham / Michigan Radio

The $195 million state contribution to the Detroit bankruptcy settlement cleared its first major hurdle today, as the state House approved the payment by a wide margin.

Applause erupted as the final bill in the Detroit package was approved by a lopsided majority. 

There were plenty of complaints about parts of the bills – such as years of post-bankruptcy state oversight, and the big withdrawal from the state’s “rainy day” savings.

The package also includes financial oversight requirements that could last for many years.

  First on Stateside, we take a look at the "Grand Bargain" in Detroit. The state has taken a big step closer to putting money down to help Detroit. 

JPMorgan Chase is investing $100 million in Detroit's future, but what does that mean for the city, and what are JPMorgan's motives?

Only 28% of you said that Michigan is the best possible state to live in, according to a Gallup Poll. So Michigan kicked off the Why I Stay project, to find out exactly why you are still in Michigan. Michigan Radio's Mark Brush joined us.

Then, a meteor shower is headed our way Friday night, so it's time to dust off those binoculars and look to the sky. 

Michigan's expansion on Medicaid – Healthy Michigan – is on track for enrollee sign-up. 

Last, we learn about a fish that has a notoriously bad reputation: the Asian carp.

*Listen to the full episode above. 

Peter Martorano / Flickr

Michigan has taken a big step closer to putting money down on the table of Detroit's "grand bargain."

The newly formed House Committee on Detroit's Recovery and Michigan's Future approved an $11 billion package that would see the state send $194.8 million dollars to Detroit. And it would create a panel to oversee city finances for at least 13 years. The aid package now goes to the full House. 

We were joined by the chair of that House committee. State Rep. John Walsh, R-Livonia. 

*Listen to the full interview above. 

Detroit Skyline
Shawn Wilson / Wikimedia Commons

For a lot of people, Jamie Dimon will forever be linked to the mortgage crisis that hit Detroit as hard as any city.

But there was no mention of that at yesterday's announcement, of course. Instead, there was a plated lunch - chicken and salad, with cupcakes - an uplifting video, and a standing ovation led by Michigan's governor, Rick Snyder.

Lester Graham / Michigan Radio

Michigan lawmakers are debating a $200 million aid package for Detroit as the city moves through bankruptcy. Until now, state lawmakers haven’t been willing to help it with anything that could be called a “bailout.”

While Governor Rick Snyder supports the current deal, many of his fellow Republicans appear to be balking, especially after a threat of political retribution from the Koch Brothers political network.

Detroit officials have been doing lots of talking in Lansing for the past week, lobbying hard for the state aid package.

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