In federal court today, an attorney representing the city of Detroit said the city plans to file its plan of adjustment next week. That’s in advance of the bankruptcy court-imposed deadline of March 1.
Detroit’s daily newspapers have reported on drafts of the plan, specifically the provisions for leasing the city’s water and sewerage department to a regional authority. Pensioners and other creditors were not addressed in the draft acquired by The Detroit News while the Detroit Free Press reported the city planned to offer unsecured creditors less than pensioners, based on the copy reporters there obtained. The final plan must be approved by the bankruptcy judge.
The next scheduled court hearing is Feb. 19 when Judge Steven Rhodes will hear an objection from insurers to how the city is treating general obligation bonds.
In his testimony earlier this month in bankruptcy court, Detroit Emergency Manager Kevyn Orr said his team of attorneys had advised him there were potential legal issues with a pension deal that left the city holding $1.4 billion in debt obligations.
Today he MADE it a legal issue by authorizing the city’s 799-page filing in U.S. Bankruptcy Court against two service corporations and two trusts related to the pension deal. “This deal was bad for the City from its onset despite reassurances it would adequately resolve the City’s pension issues,” Orr said in the statement released this evening. “We have tried without success, to negotiate a resolution to this dispute and to allow the City and its taxpayers to move forward and unwind these illegal transactions.”
And here is the actual lawsuit, filed today:
Detroit always has a next chapter…
Detroit’s bankruptcy is discussed, dissected and otherwise talked about on a number of DPTV’s MiWeek programs. The weekly half-hour broadcast focuses on stories, people and issues in Michigan, with a large focus on southeast Michigan and Detroit.
For an overview of the big questions like “What are the long- and short-term effects of the bankruptcy case in Detroit?” watch this MiWeek panel discuss pensions, the DIA’s collection, city services and other factors of the filing.
Don’t think that Detroit is alone among Michigan cities in facing sometimes staggering legacy costs in pensions and health care for retirees.
In a compelling piece, Bridge Magazine explored the issue in other cities and townships around the state, drawing on a Michigan State University study of “legacy debt.”.
Bridge also created an easily searchable database for community-by-community analysis. Try it for your community…and tell us what you find!