02.27.14

No Delay on the Final Laps: The Motor City’s Timetable:

• Creditors will have a deadline of April 1st to file objections to the city’s plan of adjustment—and that date will mark the date upon which depositions on objections may begin—with the Judge determining the challenges would bisected into legal and factual objections—with a separate trial for each category.
• Judge Rhodes set a deadline of April 4^th for the Motor City to respond to all objections,
• April 14^th for both a status hearing and to entertain objections to the disclosure statement, and
• April 28^th to hear legal objections to the plan of adjustment (which could include a battle over whether Detroit can legally be forced to sell Detroit Institute of Arts property).
• June 11 for a final pre-trial conference for June 11^th;
• June 16 for a trial date on the factual objections to the city’s plan, and
• Then set aside nine additional days throughout June for the trial if necessary.

02.26.14

No Delay on the Final Laps.  U.S. Bankruptcy Judge Steven Rhodes yesterday rejected requests to delay his proposed schedule for consideration of Detroit’s exit plan from municipal bankruptcy, noting his plan was designed to provide a “just, speedy, and inexpensive determination of this case,” and that the Motor City would run out of cash if it takes too long: “The problem with delay is the city will not have any more money to pay you if this is put off two or four or six months,” U.S. Bankruptcy Judge Steven Rhodes told attorney Carole Neville, who represents Detroit retirees. “(Detroit) is not a retail operation with a Christmas season coming.”

02.24.14

Getting Ready to Rumble.  U.S. Bankruptcy Judge Steven Rhodes this morning set an aggressive timeline between now and June 16^th—the day he has determined for the critical hearing on the city’s plan of adjustment, which, if approved, would permit the Motor City to exit municipal bankruptcy, advising all parties: “Nothing herein excuses any party from the continuing obligation to participate in good faith in any mediation…Further, the court again strongly encourages all parties to negotiate with full intensity and vigor with a view toward resolving their disputes regarding the treatment of claims in the city’s plan of adjustment.” Under the Judge’s schedule, creditors will have a deadline of March 28^th to file objections to the city’s plan of adjustment—and that date will mark the date upon which depositions on objections may begin—with the Judge determining the challenges would bisected into legal and factual objections—with a separate trial for each category.

02.24.14

Whatdawedonow?   With the Motor City filing of both the plan of adjustment—the nearly 440 page document which proposes how Detroit’s accumulated $18 billion in debts will be divvied up between its 100,000+ creditors, and its accompanying disclosure document that lays out Kevyn Orr’s plan for spending $1.5 billion over the next decade to improve essential public services, public safety, and eliminate blight; many are asking what the next chapter in this historic municipal bankruptcy is. For starters, it marks an unprecedented step into the unknown at a most critical time, best summed up by the incomparable Jim Spiotto, who notes: “Chapter 9 is a little like open-heart surgery…Much can be done to repair the patient. But if it all takes too long, it can be fatal.”

02.21.14

The Plan.  Detroit Emergency Manager Kevyn Orr today filed a proposed plan of adjustment and disclosure plan with the U.S. Bankruptcy Court that lays out how the Motor City proposes to allocate its $18 billion of debt amongst its 100,000+ creditors and provide for a sustainable future for the Motor City. (Note: please see the summary of the city’s plan below). The 120-page blueprint offers unsecured non-retiree creditors, including unlimited-tax GO holders, a roughly 20 percent recovery on their claims. The city would raise the funds to cover the claims through the issuance of new securities. The recovery rate could go up if the city brings in more revenue. The disclosure document lays out a 10-year plan of sustainability for the future through the revitalization of essential public services and public safety, proposing $1.5 billion be dedicated to capital improvements, blight removal, equipment, and technology upgrades, with up to $500 million utilized over the next five years.

02.21.14

The Bell Lap. Detroit expects to file its municipal bankruptcy plan of adjustment in federal court today, filling in the blanks from its 99-page draft plan and related disclosure document to demonstrate to the court how it proposes to treat its 100,000+ creditors and provide for a sustainable future for the Motor City. The document is intended to provide a comprehensive blueprint of the “haircuts” the city proposes to give to each of its creditors, who are owed an estimated $18 billion.

02.20.14

The Cost to Taxpayers of Municipal Bankruptcy.  The Motor City’s federal bankruptcy judge, the indubitable Steven Rhodes, yesterday questioned the need for a new team of high-cost attorneys to get involved in the city’s seven-month-old Chapter 9 case. During the court hearing, Judge Rhodes queried the U.S. Trustee’s office with questions about its December appointment of a Committee of Unsecured Creditors, and Judge Rhodes noted to Brett Miller, who is charging the City of Detroit $1,050 an hour for his services: “You’re going to cost the city millions of dollars…Every dollar they spend on you is a dollar less for a police officer.”

02.19.14

Running out of time. With the Motor City potentially filing its proposed plan of adjustment to exit the country’s largest municipal bankruptcy in the nation’s history today in his federal court today, the leader of the Motown musical group, the Indubitable Equivalents, U.S. Bankruptcy Judge Steven Rhodes will have a long day—with bond insurers appearing with the city at 10 this a.m. to challenge Detroit’s proposal to:

• declare some of its general obligation bonds as unsecured debt (please see below),
  • consider the Motor City’s request to disband a committee of unsecured creditors that the city argues is no longer necessary, claiming all major creditor groups are adequately represented in some capacity in the case,
  • consider a request by the city’s retiree committee to purchase insurance to protect committee board members against lawsuits, and to
  • hear arguments with regard to bond insurer Syncora’s dispute with two banks that own Detroit swaps.

02.18.14

The Last Lap? With the hope of filing a plan of adjustment with U.S. Bankruptcy Court Judge Steven Rhodes next week, and despite bestial weather and water main breaks, the Motor City is site to a flurry of closed-door meetings with creditors to fill in the blanks of its draft 99-page plan, meeting yesterday state government officials and a group of suburban county executives to attempt to hammer out a final agreement on a $1.9 billion plan to lease the city’s water and sewer department to a new authority.

02.04.14

The Checkered Flag?  The Motor City expects to submit its plan of adjustment next week to the U.S. Bankruptcy Court, outlining its plan of its proposed treatment or haircuts of its more than 100,000 creditors who are owed more than $18 billion of debt.  Bill Nowling, spokesperson for Detroit emergency manager Kevyn Orr, yesterday said: “We will file with or without resolution on some of the outstanding issues, like what will happen to DWSD (Detroit Water and Sewer Department),” where negotiations over Mr. Orr’s proposed $1.9 billion plan to lease the system to a new regional authority for 40 years has stalled amid negotiations with counties that are reluctant to take on the additional debt without financial disclosure documents from Detroit.