Day 20: Detroit’s Bankruptcy Trial

Day 20: Detroit’s Bankruptcy Trial

The city and several creditors announced some major settlements today in the bankruptcy case. Here’s what’s happening:

10:39 a.m.

A few more items from this morning’s session:

Detroit Emergency Manager Kevyn Orr says the city’s attorneys and consultants will contribute back $5 million toward the settlements.

Court will be in recess until Tuesday morning.

Here’s the settlement agreement, filed in bankruptcy court this morning.

10:25 a.m.

While the settlement between the parties is big news, a few more hurdles need to be jumped:

Detroit Emergency Manager Kevyn Orr said he will ask the city council to approve the deal as early as next week. “I hope I could appeal to their good graces,” Orr told Judge Steven Rhodes.

An attorney for the holders of the pension debt certificates, Thomas Moers Mayer, said he has not seen the settlement documents and term sheets and needs to take it to his clients. He said he expects they will be similar to what has been previously negotiated, but with some acceleration of payments, the differences may be material. “We just won’t say yes now,” Mayer said he was told by his client. “There is a chance I’ll have to come back and make some oral arguments if my guys see the documents and there is some problem.”

10:20 a.m.

City attorney Corrine Ball, of Jones Day, called it “big news” before she summarized the agreement the city reached with bond insurer Financial Guaranty Insurance Co. and holders of pension debt.

In part, it includes plans for tearing down the Joe Louis Area and redeveloping the riverfront west of the site. Ball said the development could include condos, a hotel and retail site that would support conventions at Cobo Hall.

As with bond insurer Syncora, which settlement its $1.4 billion claim last month, the city and FGIC will create a “Development Agreement” that will include “credits” toward future purchase of city assets. FGIC also receives bonds from the B notes and new C note classes in the Plan of Adjustment.

“We think it’s a very subtantial settlement for us,” said Alfredo Perez, FGIC attorney.

10:00 a.m.

The first settlement reported today was between the city and the Macomb County Public Works Commissioner, Anthony Marrocco, who had a $26 million claim related to construction and repairs of the Macomb Interceptor Drain Drainage District.

The settlement lowers that amount to $22 million and resolves other litigation. The commissioner’s objection to the city’s Plan of Adjustment will be dropped.

“Thank to you and everyone for your hardwork in achieving this settlement. Please extend my special thanks and appreciation to Mr. Marrocco,” Judge Rhodes told that attorneys.