Detroit’s emergency manager filed a plan Friday to restructure the city’s $18 billion debt by making cuts to pensions and creditors while offering a blueprint for emerging from the largest municipal bankruptcy in U.S. history.
According to the Detroit Free Press:
The city this morning released its Chapter 9 bankruptcy “plan of adjustment” detailing offers to more than 100,000 creditors and a “disclosure statement” revealing Emergency Manager Kevyn Orr’s plan to dramatically reshape the city’s bureaucracy.
The documents — filed electronically in U.S. Bankruptcy Court — illuminate a potential path to resolve the city’s bankruptcy, paving the way for the city to dramatically reduce an estimated $18 billion in debt and liabilities.
According to USA Today:
The city’s goal is to pay less money to Wall Street, retirees and bondholders — which collectively receive about 4 in 10 of the city’s sparse general fund dollars — and more to improve public protection, restore services and reduce blight.
The city proposed 34% cuts to pensions of general city retirees and 10% pension cuts to police and fire retirees.
But the plan of adjustment, which could change significantly through negotiations with creditors, must still be approved by U.S. Bankruptcy Judge Steven Rhodes before it is put in place.
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