Just a few hours after the city of Detroit filed its updated Disclosure Statement and Plan of Adjustment this morning, Bankruptcy Judge Steven Rhodes issued an order approving the documents.
That means the city is expected to begin distributing within a week the voting packets for thousands of creditors that range from international investment banks to local retirees. They will cast ballots on the restructuring plan, and their approval or rejection will be one of the considerations Judge Rhodes will use when he holds a trial on contested issues and a hearing on plan confirmation. Those court events are scheduled to begin in July.
Some of the groups of creditors have approved settlement deals with the city, including the boards of some employee and pensioner groups and the Official Committee of Retirees, a court-mandated panel that represents all retirees, and a group of unions. But the board approvals don’t directly relate to the votes — those will be done by individual pensioners when they receive their ballot packages.
The two groups of pensioners — police and fire in one group and non-uniformed city employees in another — will receive differing amounts and terms in their pension plans depending on whether the groups vote in favor of the plans. The groups also must approve the city’s proposal for the “grand bargain” to occur. That’s the combination of state money (that is not-yet appropriated) with funds from the Detroit Institute of Arts and several foundations that together would contribute about $816 million to pension funds. No museum artwork would be sold under the bargain terms, and the city’s plan calls for new governance of the pension systems including investment review boards.
Detroit’s $18 billion Chapter 9 filing is the largest municipal bankruptcy in history.
-By WDET’s Sandra Svoboda
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