DETROIT—The city of Detroit submitted its financial restructuring plan to federal court Friday, a move likely to set off a new round of jockeying among creditors asked to take a haircut in the nation’s largest municipal bankruptcy.
The plan seeks to restructure an estimated $18 billion in long-term obligations by paying secured creditors in full, paying pension funds a reduced amount, and giving other unsecured creditors just a fraction—about 20 cents on the dollar—of the outstanding debt the city still owes.
“There is still much work in front of all of us to continue the recovery from a decadeslong downward spiral,” Detroit Emergency Manager Kevyn Orr said in a statement Friday. “We must move swiftly to emerge from bankruptcy so that the financial distress harming the City can end.”
As part of the plan, city officials said they would set aside $1.5 billion over 10 years for capital improvements, blight removal, and equipment and technology upgrades to make the city safer, cleaner and more efficient. Up to $500 million of that will be dedicated to blight removal over the next five years, officials said. Read the full WSJ story here.
Michigan Gov. Rick Snyder, who steered the city into a bankruptcy filing in July, called on many city creditors who have been reluctant to settle to reconsider.
“Let’s use this plan as a call to action for a voluntary settlement as part of the mediation process to resolve the...
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Jon L. Gelman of Wayne NJ is the author NJ Workers’ Compensation Law (West-Thompson) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thompson). For over 4 decades the Law Offices of Jon L Gelman 1.973.696.7900 jon@gelmans.com have been representing injured workers and their families who have suffered occupational accidents and illnesses.
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