The City of Detroit on Friday filed its latest Plan of Adjustment and Disclosure Statement — We have the version with marked changes from previous documents. The Plan of Adjustment is a detailed description of how the city intends to pay its debts over the next several years. The Disclosure Statement, according to bankruptcy law, is intended to provide “adequate information” to help evaluate the plan.
In a court filing today (see below), attorneys for the city of Detroit say they will file an updated Plan of Adjustment and Disclosure Statement on March 31 and requested other court deadlines be adjusted accordingly.
“This amended Disclosure Statement will include many revisions in response to informal requests for the inclusion of additional information in the Disclosure Statement provided to the City by various parties,” the city’s attorneys wrote.
Judge Steven Rhodes granted the city’s request. The deadline to file objections to the Disclosure Statement is now April 3. The city will file a Consolidated Response by April 10.
Detroit Free Press Business Writer Nathan Bomey says of the amended plan and statement:
The new documents could include new offers to creditors. They could also include different financial projections that would affect payouts to creditors and investments in city services. …The new plan of adjustment is likely to incorporate the city’s recently renegotiated settlement with Bank of America Merrill Lynch and UBS, which agreed to accept $85 million to eliminate a $288-million pension debt interest-rate bet that helped plunge Detroit into bankruptcy.
Meanwhile, according to The Detroit News, two investment banks will no longer be required to support the city’s Plan of Adjustment in exchange for a debt settlement deal the city had worked out with them, according to court filings from Wednesday.
UBS AG and Bank of America’s Merrill Lynch Capital Services and the city earlier announced they had reached an agreement of $85 million in the “swaps” deal, originally totaling $286 million. Rhodes has twice rejected agreements between the banks and the city, calling them too costly for the city and ordering the parties back to negotiations. The deal is backed by about $15 million in monthly casino tax revenue. That’s money the city could use for services and operation if the settlement agreement is approved.
The News’ Robert Snell and Chad Livengood write of the new agreement:
Language was removed requiring the banks to support the city’s debt-cutting plan. Instead, the banks have agreed to support the debt-cutting plan as long as the settlement is included in the city’s restructuring blueprint. … In a late Friday night 1,700-page court filing, the banks’ attorneys warned that if Rhodes doesn’t approve this third deal, “costly and hotly contested litigation will ensue that will likely take years to resolve.”