Friday, December 13, 2013
Negotiations Continue in Detroit Bankruptcy
In early January, Detroit will likely file its first proposed reorganization plan in its Chapter 9 bankruptcy. Creditors are feeling the pressure now to negotiate settlement. They run the risk of losing out in the long run if they do not settle soon.
With about $18 billion in debt and long-term liabilities, Detroit will make cuts where it can to settle its outstanding liabilities at the lowest cost to the city. If creditors do not vote to support the plan, Detroit attorneys could ask the judge to approve the plan without creditor approval.
With about $18 billion in debt and long-term liabilities, Detroit will make cuts where it can to settle its outstanding liabilities at the lowest cost to the city. If creditors do not vote to support the plan, Detroit attorneys could ask the judge to approve the plan without creditor approval.
Several of the major creditors have already filed for appeal, but higher courts don't often overturn lower court rulings that rely so heavily on the facts of the case. Detroit's largest union AFSCME Council 25 and two pension funds are participating in the appeals but also pursuing mediation aggressively to bring the bankruptcy to a resolution that everyone can live with.
The city would like to exit bankruptcy by September of 2014, but getting the creditors to approve a plan is key in moving the bankruptcy forward swiftly.
posted by Darla @ 1:25 AM
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