The Balloting: Preparing for 32k pensioner votes on the Plan of Adjustment

The Balloting: Preparing for 32k pensioner votes on the Plan of Adjustment

The deadline is about a month away for mailing the 32,000 ballots to pensioners and eligible employees so they can vote on the city’s proposed Plan of Adjustment, and preparations are fully underway, The Detroit News reports.

The voting process must be clear and explain what impact cuts will have on pensions and health care benefits, U.S. Bankruptcy Judge Steven Rhodes has warned city attorneys.

That means each voter will get an explanation of what the Plan’s proposed pension and health care cuts means to them. The voter packages will include letters, ballots, return envelopes and a CD-ROM of the full plan. Ballots are due back to the court by June 30. Bill Nowling, a spokesman for Emergency Manager Kevyn Orr, told the News the proposed procedure and ballot, which the city and attorneys for pensioners have been discussing for weeks, will be filed in bankruptcy court this week.

While the retirees and vested employees are among the 170,000 creditors who have a vote on the plan, if they don’t approve it, it doesn’t mean the parties go back to the table.

If retirees and other creditors vote against the debt-cutting plan, Detroit could force cuts on creditors under a process known as a cramdown. Under bankruptcy law, if one class of impaired creditors supports the debt-cutting plan, Detroit can impose cuts on others and get the plan confirmed by Rhodes. The city’s plan, however, must be fair and equitable and not discriminate.

The city currently has a deal with two investment banks, which would allow the “cramdown” to occur with other classes. The city’s current offer has general employees taking a 26 percent cut to pension payments and police and firefighters 4 percent. Those offers fall to 34 and 10 percent, Orr has said, if the groups don’t accept soon.

Detroit News columnist Nolan Finley wrote over the weekend that retirees should take Orr’s offer:

Detroit’s retirees are playing Russian roulette. They’re the key puzzle piece in settling the city’s bankruptcy. If they take the deal on the table, the process can wrap up rather neatly, and they’ll have much more in their pockets than was initially predicted. If they reject it on the delusional hope something will happen to hold them harmless from the city’s insolvency, they risk ending up with less cash. And getting the city out from under both bankruptcy and emergency management will become more complex.

The bankruptcy trial is currently scheduled for July.