So it’s official: Detroit’s come up with a viable plan to pull itself partway out of debt, following a long and convoluted bankruptcy trial. From Reuters:
The federal judge who approved Detroit’s plan for exiting the biggest-ever U.S. municipal bankruptcy gave the city on Wednesday the go-ahead for putting the plan in motion.
“The city needs to begin implementing this plan immediately,” U.S. Bankruptcy Judge Steven Rhodes said at a hearing.
The decision came following Rhodes’ decision on Friday that Detroit’s plan to cut its $18bn debt to a mere $11bn was fair to creditors and, more importantly, could actually work. Today, Rhodes ruled that the normal 14-day wait period before putting the plan into action could be waived.
Detroit’s grand plan relies on a bargain made with various foundations, the state of Michigan and the city’s water and sewage companies, who have all pledged hundreds of millions of dollars towards the city’s pensions. Amazingly, pensioners have agreed to lifelong reductions in their monthly payments in return.
The saga doesn’t end here, though – the city’s mayor, Dave Bing, has raised questions about the fees paid by the city to lawyers, financial advisors and consultants during the trial: as of 1 October, the total stood at around $23m. Rhodes will review these payments at yet another hearing in December.
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