The city of Detroit, Michigan, filed for Chapter 9 bankruptcy on July 18, 2013. It is the largest city bankruptcy filing in US history by debt, estimated at $ 18-20 billion, surpassing Jefferson County, Alabama's $ 4 billion filing in 2011. Detroit is also a city the largest according to the population in US history for Chapter 9 bankruptcy files, more than twice as large as Stockton, Calif., filed in 2012. While the Detroit population has declined from a peak of 1.8 million in 1950, the July 2013 population is reported by > The New York Times as the city of "700,000 people, as well as tens of thousands of abandoned buildings, vacant lots and dark streets."
Detroit's bankruptcy filing follows a financial emergency statement in March 2013 that resulted in Kevyn Orr being appointed "city emergency manager" by Michigan Governor Rick Snyder. Negotiations Orr further asks creditors to be willing to "take a cut" on Detroit's debt, and ultimately unsuccessfully.
On July 19, 2013, Judge Rosemarie Aquilina of the Tirtieth of Michigan Tribunal Court ruled that bankruptcy filing by Detroit violated Article IX, Section 24, of the Michigan Constitution and ordered Governor Rick Snyder to withdraw the submission immediately. On July 23, an appellate court resident in a circuit court ruled a future decision on Michigan Attorney General Bill Schuette's appeal. On July 24, the Bankruptcy Court added that it was federal from state court proceedings. On August 2, the bankruptcy court set the date of the hearing of October 23, 2013, for a hearing of all objections to the city's eligibility for Chapter 9 bankruptcy, and March 1, 2014, as deadlines for the city to submit a bankruptcy plan. After nine days of due diligence, the Bankruptcy Court on December 3, 2013, Detroit decides to qualify for Chapter 9 on a $ 18.5 billion debt. On June 3, 2014 the Michigan Legislature issued a bill package to help Detroit avoid further bankruptcy proceedings. On the same day, Governor Snyder promised to sign the bill package.
After a two-month trial, Judge Steven W. Rhodes confirmed the city's adjustment plan on November 7, 2014, paving the way for Detroit to get out of bankruptcy. Creditors and insurers are expected to absorb a loss of $ 7 billion, with creditors receiving between 14 and 75 cents.
Video Detroit bankruptcy
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In April 2012, Detroit Mayor Dave Bing and the City Council of nine members entered into an agreement with Michigan Governor Rick Snyder allowing for greater fiscal oversight by the state government in exchange for providing Detroit state aid with his finances. The financial review team is appointed in December 2012 for a 60-day review. The team consists of Andy Dillon (Michigan Treasurer), Thomas McTavish (Chief Financial Officer Michigan and Auditor General), Ken Whippel (Korn/Ferry), Darrell Burks (PricewaterhouseCoopers), Ronald Goldsberry (Deloitte Consulting) and Frederick Headen. In February 2013, Snyder announced that the state government of Michigan took the financial control of the city of Detroit, seeing that Detroit failed to meet the deadline set by the state government. In accordance with the 72nd Public Act of 1990, the State Emergency Financial Assistance Council state government appointed emergency financial manager Kevyn Orr from Detroit following a financial emergency statement. As an emergency manager, Orr was authorized to rewrite Detroit's contract and liquidate the city's assets.
A report on Detroit's financial health was released by Orr in May 2013. The report stated that Detroit "is clearly bankrupt on a cash flow basis" and that the city will complete its current fiscal year with a cash flow shortfall of US $ 162 million. He also stated that the city budget deficit would reach $ 386 million in less than two months and that one-third of the city's budget would be used for retirement benefits.
In June 2013, the Detroit government stopped making payments on some insecure debt, including pension obligations. In an effort to avoid bankruptcy, Orr sought to persuade some of Detroit's lenders to receive 10% of the amount they had. White House press secretary Jay Carney said during a press conference in July that he knew no plan by President Obama to save the Detroit city administration was similar to bailouts in recent years from Detroit-General Motors and Chrysler. On July 17, just one day before filing for bankruptcy, two of Detroit's largest city pensions filed a lawsuit in state court to prevent Orr from cutting pension benefits as part of his efforts to cut the city's budget deficit.
Since 1937, there have been more than 600 Chapter 9 bankruptcies in other United States cities, towns, villages, counties, and special-purpose districts. The previous largest Chapter 9 bankruptcy took place in Jefferson County, Alabama, in 2011.
Maps Detroit bankruptcy
Bankruptcy filing
After several months of negotiations, Orr finally was unable to reach an agreement with Detroit's creditor, union, and retired board and therefore filed for Chapter 9 bankruptcy protection in the Eastern District of Michigan US Bankruptcy Court on July 18, 2013. Snyder approved the submission by Orr in a letter attached to court documents. Some of the causes of bankruptcy are the shrinking tax base caused by the declining population, the cost of the program for the health care of pensioners and pensions, loans to cover the budget deficit (since 2008), poor records and ancient computer systems, that 47% of owners have not paid property tax 2011 them, and government corruption. Two urban workers' retirement programs for almost 25 years have paid "13 month checks".
The bankruptcy of cities, towns, villages and districts since the Great Depression has been rare (about 60 since 1950, about 1 per year, more specialized district bankruptcies), and how Detroit will be affected is not clear. Detroit's long-term debt is estimated at more than $ 14 billion and could be between $ 18 and $ 20 billion, well beyond the $ 4 billion in debt of Jefferson County, Alabama, which is America's largest bankruptcy to date. It is also the largest city by population in US history to file for bankruptcy, with more than twice the population of Stockton, Calif., Filing for bankruptcy in 2012. State officials say that municipal services will not be affected immediately by bankruptcy filings. Municipal workers with pensions are not insured by Federal Pension Benefit Guaranty Corporation, as they work for municipalities rather than businesses, and some have also received pensions in lieu of Social Security benefits.
According to the Detroit area bankruptcy lawyer, the legal costs for bankruptcy proceedings can cost "tens of millions to hundreds of millions of dollars." Orr hopes Detroit can emerge from bankruptcy in the late summer or autumn of 2014; he says that the process moves as "as fast as possible".
Orr has considered the sale of valuable city assets, but other arrangements or regulations make it difficult to sell some of them. For example, valuable works at the Detroit Institute of Arts can not be sold because of personal and city agreements, as well as state law; Other city assets that can be sold include Coleman A. Young International Airport and Belle Isle Park. Eddie Francis, mayor of neighboring Windsor, Ontario, said his town would consider buying half of the Detroit-Windsor Detroit Tunnel if offered for sale.
Reaction
Bond yields issued by the city of Detroit increased on July 18 to a record high, as investors mulled the potential effect of bankruptcy filings. Prices have increased when yields soared from 8.39% in mid-May to 16% by mid-June 2013. Credit rating agency Moody's said that the filing for bankruptcy credit was negative for Detroit and that it created an "unprecedented litigation scenario," which could have an impact on services received by city dwellers, as well as how many bondholders will recover from Detroit.
Business leaders and workers react to archiving. The Detroit union leader called Orr's move to declare premature bankruptcy due to ongoing financial negotiations with creditors, unions and retired councils, but also stated that employees will continue to work in a distinctive way. The only major US company headquartered in Detroit, General Motors, said "proudly calls Detroit home and... (this) is the day that we and others hope will not come." We are confident that today can mark a clean start to the city. "
Politicians have commented on bankruptcy. Bing says that the Detroit people "have to make the best of it". Snyder states that "I know many people will see this as the lowest point in the history of the city," "If so, I think it will also be the basis of the future of the city - a statement I can not do in disbelief of giving the city an opportunity to start a new, no-debt burden that can not be expected to be fully paid. "President Barack Obama said that he is following developments and that he is" committed to continuing strong partnerships "with Detroit. Senator Kentucky, Rand Paul stated that he would not allow the government to save the city, saying, "He saved them from my corpse, because we have no money in Washington." Snyder also stated that he does not support government guarantees. "It's not just about putting more money into the situation," he said. "It's about better service for citizens again, it's about responsible government."
Detroit's debt included $ 369 million in unlimited public bonds, bonds issued with general taxpayer support, described by Ben Lakkins bond finance director Florida as "[has] become the gold standard of the municipal bond market." The offer by Kevyn Orr to complete this is less than 20% of face value, and doubts about Michigan's willingness to assume debt, are expected to raise borrowing costs from nearby cities. This effect has been seen in relation to the area in Michigan. Three so far have to postpone new bond offerings or face higher interest rates. However, these concerns have not materialized on a wider scale, as investors have actually treated public bonds as more secure than before filing. The latest history of California "has shown that the collapse of bankruptcy can disappear quickly" in the bond market. Contributing to this is the fact that Moody's has less than 40 of the 7,500 local governments listed as investment ratings below.
As soon as Detroit declared bankruptcy, it was reported that the city would continue its bond issuance plans to fund a new $ 444 million arena for Detroit Red Wings. Repayment of bonds will be shared between the taxpayer and the arena developer. Both Snyder and Orr acknowledge the concerns arising about costs, but claim that continuing the project makes good economic sense even with the Detroit bankruptcy context. With the arena, and the additional retail, office, residential and hotel space that has been committed to develop by the developers as part of the overall project, it is expected to create about 8,000 construction jobs, with work to begin in 2014.
Legal development
From bankruptcy filing to eligibility
On July 19, 2013, Ingham County Circuit Court Judge Rosemarie Aquilina decided, using a typed statement with handwritten notes attached, that the bankruptcy filing by Detroit violated the Michigan constitution by disrupting pension payments and ordering Snyder to withdraw the submission: Snyder has appealed to the movement it, and Aquilina indicated she sent a copy of her verdict to President Obama. While under Article IX, Section 24, the Michigan Constitution, both state and part of the "political subdivision" are allowed to fail on the accrued financial benefits of their pension or pension system, federal law may allow the bankruptcy judge to renegotiate retired municipality in bankruptcy. Many consider the public retirement benefits of existing pensioners "almost untouchable"; clashes between the state's constitutional protection of public pension rights and the general ability of bankruptcy proceedings to change debt obligations have not been fully tested in Chapter 9 anywhere.
On July 22, Aquilina delayed until July 29, hearing the request of a pension fund for orders directing Orr and Snyder to withdraw bankruptcy filings and stop all attempts to reduce their own pension benefits in the face of their protected status under the Michigan Constitution. This legal move allows the bankruptcy court to weigh. Bankruptcy Judge Steven Rhodes scheduled a hearing on July 24, at the request of the town to keep the retired state court in place due to a pending federal bankruptcy case. Rhodes pointed out that a bankruptcy court, not a state court, has the authority to resolve a dispute between the city and a pension fund on the city's authorization to file a bankruptcy case.
On July 23, a three-judge panel of Michigan Court of Appeals voted unanimously to continue the trial in state court action, pending a country's appeal resolution over Aquilina's decision to direct the withdrawal of bankruptcy filing. In another development in the bankruptcy case, Rhodes indicated in a filing on July 23 his intention to appoint a mediator to work with the parties in bankruptcy. Rhodes indicated that the mediator would be Chief Judge Gerald Rosen of the US District Court for the Eastern District of Michigan.
On July 24, a bankruptcy court held a two-hour hearing at the request of the city for delayed pending state court proceedings against Snyder and Orr. Rhodes was then given a federal stay and decided that Orr was the official officer authorized to act for the city in bankruptcy. Rhodes ordered three lawsuits filed by city officials, pensioners, and pension funds in the District Court to be stopped. He affirmed that all legal battles will be fought at the Federal Bankruptcy Court. Rhodes emphasized that he did not on July 24 decide whether the city met the mandatory criteria for filing Chapter 9, or the effect on Michigan's bankruptcy case of constitutional protection over public pension benefits.
On July 27, Michigan Attorney General Bill Schuette announced that he would enter the bankruptcy case in order to defend Michigan's constitutional protection for public pension benefits. Schuette says that by doing so he will act in his role as a "people's lawyer." Schuette acknowledges that no action is currently pending in cases related to public pensions, but he states that by filing an appearance he "will be able to defend the country's constitution if and when this happens." Schuette's office also represents Snyder, who prefers cutting Detroit's public pension plans as an element to restore the city to financial stability. A spokesman for Schuette said that his office will continue to represent governors and other state agencies in bankruptcy; sets of different lawyers in the attorney general's office will represent these different positions. A spokeswoman for emergency managers Orr said that Orr "respects the attorney general's concern for retired Detroit.This is an important issue to be decided, appropriately, by a federal bankruptcy judge."
On August 2, the bankruptcy court held a status conference, set an initial schedule for the case, and made some initial decisions. The court set August 19 as a deadline for any party to file an objection to the city's eligibility for Chapter 9 bankruptcy, and October 23 as the date of the hearing for the hearing of the objection. The court set March 1, 2014, as the deadline for the city to submit an adjustment plan for its debts. The court ordered the appointment of a cost inspector to review the expenses incurred by lawyers and other professionals for the City, and invited comments on naming the right person to fill this role. The Court presented a proposal proposing the establishment of a mediation process aimed at facilitating the settlement of the disputed issue that would arise in this case, and inviting comments on the appropriate mediator naming, with a court that had initially filed a Chief Judge Gerald Rosen from the US District Court. for the Eastern District of Michigan. The court ordered the Office of the United States Trustee to appoint an official committee to represent retired city employees, with the US Trustee to elect members to serve on this Retirement Committee. The professional cost of the Pension Committee will be paid by the city, which agrees to do so. When the cost examiner is appointed, the professional costs of the Pension Committee will also be reviewed by reviewers. On August 19, Rhodes appointed Robert M. Fishman, a lawyer from Chicago law firm Shaw Fishman Glantz and Tobin, as a cost inspector. Fishman's own fee is charged $ 600 per hour. Another lawyer who has served as an expert witness in charge issues commented that, while the cost is unquestionably great, the legal costs are always a small percentage of what is at stake in this large bankruptcy.
On August 13, Judge Rhodes, having received feedback from various parties in bankruptcy, confirmed the appointment of Judge Rosen from the District Court to serve as mediator in the case process of Chapter 9. The mediator can unite all parties for "facilitative mediation" on any issues Rhodes chooses to refers to mediation. Any mediation proceedings held will be kept confidential, except for any settlement requirements that can be reached and submitted to the bankruptcy court for approval. On Aug. 21, Rosen - as permitted by Rhodes' order to pick it up - pointed to an additional mediator to help her. As Rosen said, mediation in this case would be a monumental task, involving "thousands of claims and problems." Additional mediators are: US District Judge Victoria Roberts, a native of Detroit who is also a professor at the University of Michigan Law School; US Bankruptcy Judge Elizabeth Perris of the District of Oregon, who has served nearly 30 years as a judge and has been a court mediator in Chapter 9 bankruptcy of Vallejo, Stockton and Mammoth Lakes, California; US Senior Judge in Wiley District Daniel from the Colorado District, former resident of Detroit; former US Bankruptcy and US District Judge David Coar, who also serves as a private mediator in major bankruptcy cases, including Mammoth Lakes, California, Chapter 9; and Eugene Driker, also a native of Detroit, who "is considered a leading mediator in Michigan."
On August 19, the deadline set by the bankruptcy court, 109 objections filed to Detroit's eligibility for Chapter 9. Among the more prominent opponents are the Association of Retired City Employees and the Detroit Police and Firefighters Association of Retired Retirees, UAW, AFSCME, Systems Municipal Public Pension and Police and Fire Retirement Systems, Detroit Fire Fighters Association and Detroit Police Officers Association (and two levels of higher ranking police officers association). Many people were also among those who objected, including some in handwritten notes. Attorney General Schuette filed a statement that his office does not oppose Detroit's eligibility for Chapter 9, but objected, and will continue to object, to Detroit's ability through bankruptcy proceedings to reduce retirement benefits in connection with Michigan's constitutional ban on disruption of this obligation. In particular, representatives of bondholders and municipal bond insurers choose not to object to eligibility. This is irrespective of Kevyn Orr's intention to treat about $ 2 billion of bond obligations as a general unsecured obligation, which is likely to result in heavy losses for bond-bound parties. Frank Schafroth, director of the State and Local Leadership Center at George Mason University, commented that the choice not to deny eligibility reflects the lessons learned in the case of Stockton, California, Chapter 9. There, bondholders and bond insurers make month-long litigation efforts to make Stockton declared ineligible. But this costly and time-consuming effort proved unsuccessful. A lawyer for some bondholders in the Detroit case commented that they felt it was better to have a bankruptcy judge as a referee than to deal only with Orr on terms of his severe pre-bankruptcy proposal to the bond groups.
Judge Rhodes ordered that the initial argument on the pure legal issues of Detroit's eligibility for Chapter 9 be held October 15-16, rather than October 23 of the full trial on eligibility. Rhodes stated preliminary considerations of pure legal issues, such as the Detroit authorization under state law for bankruptcy filing, will speed up the determination of eligibility under the Bankruptcy Code. At the same time, Rhodes reserves issues that require factual determinations, such as whether Detroit negotiates in good faith with its creditors before filing for bankruptcy, for the October 23 trial.
On December 3, Judge Rhodes ruled Detroit qualified for bankruptcy protection. In his decision, the judge ruled that Detroit was bankrupt, and that the city could not practically negotiate on a pre-bankruptcy adjustment plan with its thousands of creditors. The judge refused to find that the city had negotiated in good faith with the creditor before the bankruptcy, based on testimony to the feasibility test; He noted that city meetings held with creditors leading to the filing of bankruptcy do not meet the requirements of good faith law. However, he finds the city eligible for Chapter 9 on alternative land laws of the impracticality of negotiating with so many creditors. The judge also discovered that the city has the potential to disrupt retired pensions of the city through a plan under federal bankruptcy laws, although Michigan's constitutional provisions protect the pension from harassment.
Judge Rhodes followed the announcement of his verdict in an open court with a 143 page written note providing the basis for the verdict. The memorandum discusses in detail the city's financial status. It reviews the legal criteria for eligibility and shows them the satisfied city, and finds that the city meets the minimum criteria for eligibility. This memorandum discusses in depth the main objections raised by various parties to the appropriateness of the city, and finds that the objection is not lawful or not factual enough to reject the city's eligibility for Chapter 9. The judge terminates the memorandum with a reminder to all interested. qualified parties are only the first step in the case of Chapter 9, and that "the end goal is confirmation of the adjustment plan.... The Court strongly encourages the parties to start negotiating, or if they have already started, to keep negotiating, with a view to direction of the consensus plan. "
Attracting eligibility decisions
Judge Rhodes refused to keep the effect of his eligibility in power while any potential appeal was decided. He also indicated that he would consider permission for an appeal to proceed directly to the US Court of Appeals for the Sixth Circuit, rather than the first regular appeal route to the federal district court, in a separate movement. AFSCME immediately filed appeal verdict. It is expected that independently managed pension funds for city workers will join in the appeal. Detroit Teachers Union will appeal against a bankruptcy decision by Randi Weingarten, the national president of the American Teachers Federation. On December 16, 2013, Judge Rhodes gave a motion by AFSCME and a pension fund that allowed an immediate appeal to the Sixth Circuit. Such permits include decisions on eligibility for Chapter 9, and the decision that cities may undermine public pension benefits through Chapter 9 plans.
Controversy fees
On October 1, 2013, Detroit has spent nearly $ 23 million in fees for lawyers, consultants and financial advisers for bankruptcy. Some of the costs are:
- $ 11 million to Jones Day law firm
- $ 4.59 million to Conway MacKenzie, Detroit's regional restructuring company
- $ 4.17 million for Ernst & amp; Young, the accounting firm
- $ 1.5 million for Plante Moran, the accounting firm
- $ 1.2 million for Miller Buckfire, investment banking company
Orr used $ 95 million for unsecured bonds and pension payments for the Detroit restructuring initiative, which caused Detroit to first lose its bond payments in June 2013.
The fees paid to 3 partners of Jones Day who collect cities for more than $ 1000 per hour of their time, as well as for trips to or from vacation homes, proved very controversial, but their former partner Kevyn Orr, did not consider them overbilling. On December 31, city officials revealed that the city's general fund paid $ 164.91 million in costs related to bankruptcy, although they did not disclose the concessions made by various parties according to mediation orders, which are said to be worth about $ 25 million. The city adjustment plan is allocated $ 177 million for legal fees and consultation. Costs disclosed include:
- $ 57.9 million for Jones Day,
- $ 17.28 million to Conway MacKenzie for operational restructuring
- $ 20.22 million for Ernst & amp; Young for financial restructuring
- $ 22.82 million to investment banking firm Miller Buckfire, and
- $ 15.41 million to Dentons US LLP, the law firm acting on behalf of the city's retired pension committee that fights pensions cuts
- $ 980,000 was sent to two Detroit mediator companies
Furthermore, two pension funds pay attorneys at Clark Hill $ 6.25 million and financial advisors at Greenhill & amp; Co $ 5.71 million to fight the bankruptcy case. Judge Rhodes, whose judicial salary is set by Congress, has up to 14 days to determine whether the agreed fee makes sense.
City debt adjustment plan
After Chapter 9 of the feasibility decision, emergency manager Kevyn Orr said the city would seek to submit a plan for its debt adjustment under the bankruptcy law in early January. Orr says that negotiations with unions for city workers on the terms of the plans may continue. The plan was approved by the US Bankruptcy Court in November 2014.
The Grand Bargain and End of Bankruptcy
One of the biggest problems facing the fighters from Detroit's bankruptcy is the city-owned asset entirely and which is available to creditors to meet the obligations. There is no place where this question arises more than the fate of the Detroit Institute of Arts. HE holds 66,000 valuable pieces; However, only five percent of this collection is purchased with city money. Rhodes Judge must decide whether the other 95% of this collection can be monetized to meet the claims of a bankrupt creditor. In particular, whether art collections will be required to meet pension claims of retirees.
Chief Judge for the Eastern District of Michigan Gerald Rosen, who had taken on the role of prime mediator, and Rhodes sought a swift resolution to bankruptcy worrying about a process that could take years to complete. On November 5, 2013, Rosen held a meeting at the federal courthouse in Detroit with leaders from some of the largest foundations in the country. Among those present were Ford, Knight, and Mott Foundations. This is where Rosen compiled his plan which would be known as Grand Bargain. Rosen's plan seeks commitments for more than $ 800 million over the next 20 years from foundations, private donors, HE and states that will be used to support unfunded pension funds. This will save HIM from his art sales; HE will then become a private organization, release it from city ownership and protect its collection forever.
When asked why they donate, Darren Walker, president of the Ford Foundation said, "If you do not have a big city, you will not have a big country," he said. "Detroit is a metaphor for America, for America's challenge and America's chances.This is home to new innovations, for ingenuity and risk-taking.That's not the case in many American cities.We should be in Detroit because of that." In total the foundation will do $ 366 million over 20 years to the Detroit Future Foundation, a nonprofit set up to act as a fiduciary for funds.
On December 22, Rosen refused a $ 230 million negotiated settlement between the city and Bank of America Merrill Lynch and UBS. The city is owed to the $ 290 million banks for its investment by former mayor Kwame Kilpatrick. Cities and banks will settle, on the 24th, for $ 185 million in a Rosen-negotiated deal. Rhodes will then make the stuns of people who follow the process, in what is known as the Christmas Night Massacre, when he refused a settlement three weeks later, saying that it was "too high a price to pay". After Orr threatened to sue the two banks, they eventually set $ 85 million. In January 2014, the city will come to an agreement with some of its heaviest opponents (three bond insurance companies) to whom they owe $ 388 million to municipal bonds by agreeing to pay 74%.
HE initially offered $ 50 million to Grand Bargain; towns, governors and others who pushed the deal to see that it was too low to get the state legislature aboard. Ultimately, HE will agree to contribute $ 100 million.
In May 2014, the law was introduced by giving Detroit's pension system of $ 194.8 million as well as part of a $ 350 million commitment to the state. If a pensioner accepts an agreement, they will not be able to sue the state for pension reduction; this is seen as an important step to get support from the Republican majority legislature. Some Republicans, such as House Chief Jase Bolger, want unions to make contributions to help in Detroit settlements. Another condition sought was a financial review commission that modeled on the New York State Financial Control Board who oversaw New York's troubled finances during the 1970s and 80s. After the union agreed to donate money for settlement, the Michigan Building passed a bill with massive bipartisan support on May 22. Governor Snyder called the legislative package an opportunity to change Detroit's direction. The country's Senate will follow on 3 June and soon after. After passing, the Detroit News called the final legislative package a "masterpiece," and Detroit Free Press argued that the deal showed members of parliament "understand." In total, Judge Rosen's plan was able to collect $ 816 million from various entities to create the Grand Bargain.
At the beginning of the negotiations, retired cities see themselves threatened with a 50% cut. However, with such large offerings the deductions are reduced to 4.5% without increased cost of living. During the spring and summer of 2014 more than two-thirds of the Detroit pensioners voted in favor of the deal.
On September 10, Detroit reached an agreement with three counties of Michigan for regional water and sewerage services that could remove a roadblock to federal court approval of a city plan to adjust its debt and get out of bankruptcy. Agreements with the Oakland, Wayne and Macomb counties created the Great Lakes Water Authority, the new regional water and sewer authority, but allowed Detroit to maintain control of its local system. The deal is very important to adjust the city's $ 18 billion in debt and help it out of the city's unprecedented bankruptcy.
Detroit will reach an agreement with more of its creditors throughout the fall. In September, the Syncora bond insurer earned a $ 400 million claim; Syncora will receive $ 25 million in cash and bonds, as well as a 20-year lease extension on their operations from the Detroit-Windsor Tunnel and 30-year underground garage rental at Grand Circus Park.
On October 16, city lawyers and Financial Insurance Company (FGIC), a bond insurer with a $ 1 billion claim, were disclosed in court that they have reached an agreement to settle the company's claims. Under the deal, the city and state will pay for the demolition of Joe Louis Arena's city after Red Wings moved into a new arena. After demolition, FGIC will receive adjacent parks and parking lots, giving the company nearly 9 hectares (3.6 ha) for redevelopment.
On November 7, 2014, Judge Rhodes accepted the city's adjustment plan, 17 months after the city filed for bankruptcy - a much shorter period of time predicted by other city bankruptcies. At the hearing, Rhodes commented, "We have used the phrase 'Grand Bargain' to describe a group of treaties that will fix the problem of city pensions.The explanation is entirely fitting.In our country, we join together in the promise and in the ideal of a greater bargain , is a bargain by which we interact with each other and with our government, all for the common good, the great bargain, enshrined in our Constitution, is democracy, now it's time to restore democracy to people from Detroit City. "
On December 10, HE's ownership was transferred to DIA non-profit, Inc. The next day Detroit came out of bankruptcy protection with financial back to city control, which is subject to three-year supervision by the Detroit Financial Review Commission.
See also
- The history of Detroit
- Partial list of chapter 9 bankruptcy of the United States.
- Historical New York City (1946-77): During the 1970s, New York City received a federal loan to avoid filing bankruptcy under the rule of President Gerald Ford.
- Flint, Michigan's financial emergency
- City bond
- Financial emergencies in Michigan
References
External links
- US. Filing of Bankruptcy Court by Orr Emergency Manager for Detroit City
- The US Bankruptcy Courts Official Website for the Eastern District of Michigan contains information for Detroit City Bankruptcy Filing
- "Friday, July 24 - Friday, July 31st". The Tavis Smiley Show . July 24, 2015. Public Radio International. Ã, A series of live discussions with the people involved with the Detroit bankruptcy.
Source of the article : Wikipedia
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