04.09.14

One More Lap. The Detroit Free Press earlier this morning reported that Detroit could today announce it has reached a bankruptcy settlement with its unsecured bondholders. If so, the announcement would reflect a critical breakthrough, and it could become the proverbial straw to break the camel’s back—creating a significant incentive for others of the city’s tens of thousands of creditors to work out a deal with the city, rather than cross their fingers in hopes of a potentially favorable ruling by U.S. Bankruptcy Judge Steven Rhodes.  Continue reading

04.08.14

One More Lap.  The American Federation of State, County and Municipal Employees Council 25, Detroit’s largest union, in its objections to the Motor City’s plan of adjustment yesterday warned that Kevyn Orr’s plan to reduce pension payments to the city’s retirees would lead to significant increases in crime and poverty if accepted by the federal court. AFSCME’s comments, filed on the last day comments could be submitted, came even as Emergency Manager Kevyn Orr yesterday confirmed his legal team was still unfinished in its efforts to comply with U.S. Bankruptcy Judge Steven Rhodes’ order that Mr. Orr provide union members and retirees with a document that describes the city’s proposals as they would affect union members and retirees in “plain English.” AFSCME, in its submission, wrote that creditors, including city workers, could get a better deal if the Motor City reneged on tax breaks and land deals proposed to be provided to “the wealthy,” adding: “The city must disclose the risk that its financial projections do not properly take into account the added poverty rolls it may need to support, and further, the effect of such pension cuts on the morale of the AFSCME employees, the likely increase in crime and decaying social atmosphere, and all that comes with the proposed pension cuts.”   Continue reading

04.04.14

One More Lap. U.S. Bankruptcy Judge Steven Rhodes yesterday after nearly an 8-hour hearing announced he would issue his decision a week from today on the Motor City’s request to end costly interest-rate swap agreements, a key issue as the city seeks to exit bankruptcy later this year. Since filing for bankruptcy last July, Detroit Emergency Manager Kevyn Orr has sought to rid the city of the banks’ on $170 million in annual casino revenues, testifying yesterday that he “continue(s) to believe that resolving the swap agreement was in the best interest of the city,” as opposed to the cost of challenging the swap agreements in court: “It was significant. It could be millions of dollars a month.” Continue reading

04.03.14

One More Lap.  U.S. Bankruptcy Judge Steven Rhodes yesterday approved Detroit’s revised, $120 million debtor-in-possession or DIP loan from Barclays, telling the courtroom the city “is not providing sufficient services to meet the basic needs of its citizens…This loan will provide the city with the means to begin to make up that deficit. The time to begin is now, if not before now…This court has previously held that the city is service-delivery insolvent.” The loan is to buy emergency vehicles and remediate blight in the city of about 700,000 people. Continue reading

04.02.14

One More Lap.  The Sixth Circuit U.S. Court of Appeals in Cincinnati yesterday partially granted the Motor City’s request that filings in the seven appeals be done in one lead case. At the same time, the federal appeals court denied a motion that some of the parties made to have the cases fully briefed by the end of May instead of mid-June. (14-0106 Carl Williams, et al., 14-1208 Police and Fire Retirement Sys, et al. v. City of Detroit, Michigan; 14-1209 Official Committee of Retirees v. City of Detroit, Michigan; 14-1211 Michigan Council 25 of the Ame, et al. v. City of Detroit, Michigan; 14-1212 Retired Detroit Police & Fire, et al. v. City of Detroit; 14-1213 International Union, UAW, et al. v. City of Detroit, Michigan; 14-1214 Detroit Fire Fighters Association, et al. v. City of Detroit, Michigan; and 14-1215 Retired Detroit Police Members v. City of Detroit, Michigan. Continue reading

04.01.14

One More Lap.  Detroit Emergency Manager Kevyn Orr late yesterday proposed a 235-page revised plan of adjustment and a revised disclosure plan with the U.S. Bankruptcy Court that proposes steeper cuts to retirees unless they support a restructuring plan that includes money to shield the Detroit Institute of Arts from creditors. The plan revises how the Motor City is seeking to allocate its debts amongst its 170,000 creditors—and to preserve about $1.5 billion to invest in its future. In its filings, the Motor City made clear it expects to make further revisions in each of the documents—both hundreds of pages long—between now and Judge Steven Rhodes’ April 14th hearing  when creditors expect to challenge the completeness of the respective documents. Continue reading

03.31.14

One More Lap.  Despite still another Polar Vortex visit to the Motor City, this will be a frantic week in U.S. Bankruptcy Judge Steven Rhodes’s courthouse: The Motor City intends to file a new or revised plan of adjustment and disclosure statement today in an effort to address a number of complaints from some of its 100,000+ creditors of insufficient information, promising it will provide updated agreements as a result of ongoing negotiations; Judge Rhodes also agreed on Friday that he would make a decision Wednesday in response to a request from some of Detroit’s creditors for a delay in the SWAPs hearing scheduled for Thursday; Detroit Emergency Manager Kevyn Orr is scheduled to be deposed today;  and Judge Rhodes will now have to deal with Syncora’s request Friday to subpoena to the Detroit Institute of Art (DIA), as well as Christie’s auction house, and the State of Michigan for dozens of documents—with Syncora and others of the city’s creditors claiming the art collection may be worth far more that Christie’s has estimated.  Finally (tired yet?), Judge Rhodes will also hear a dispute on Detroit’s debtor-in-possession or proposed $120 million DIP loan with Barclays at the Wednesday hearing. Continue reading