US Bankruptcy Judge Steven Rhodes received the latest schedule of the state of Detroit's plan to submit its debt-adjustment plan at a status conference today in the city. One of the attorneys leading the city's talks with creditors, Bruce Bennett, had given the latest timing to the judge, which will allow the biggest municipal bankruptcy case ever in the US to enter its final phase, said Bloomberg.
Reuters said the proposal, of which it had obtained, indicated that two pension funds of the state, which are Detroit's largest unsecured creditors, will be faring better as compared to the municipal bond owners, of which they possess are considered unsecured debt. Bloomberg also revealed that the initial version of the proposal the past month have the city paying the pension funds 45% to 50% of the amount they are owed, while some of the general obligation bondholders will only get to be paid as little as 20%. Crafted by Detroit Emergency Manager Kevyn Orr and his team of consultants according to their discussions with its debtholders, the plan reportedly excluded interest-rate swap agreements from the settlement plan after Rhodes rejected the agreements between Detroit and the swap providers to end the agreements at a lesser cost twice, Reuters added.
Once the plan has been filed by the city of Detroit, Bloomberg said Rhodes will need to decide whether the plan has enough information for the state creditors to vote on it. The vote, then, will be considered as a significant factor to Rhodes' decision on whether Detroit could end its $18 billion bankruptcy case.
Rhodes also said today that it had given the parties involved in the state bankruptcy-related lawsuits enough time to file their legal motions.
Bloomberg said that the US state filed for bankruptcy protection on July 18 last year after experiencing economic decline in decades and claimed that it could no longer pay off its debts to creditors while providing basic services to the city.
