The city of Detroit has been suffering through some tough times financially. The city had to file bankruptcy in an attempts to stave off bill collectors.
Detroit revealed its historic plan to emerge from under $18 billion in debt Friday, laying the groundwork for what’s expected to be a long, bitter battle with creditors, retirees and bondholders over the biggest municipal bankruptcy ever.
The 120-page ‘plan of adjustment’ could change radically as negotiations with pension funds, creditors and others move forward. It must still be approved by U.S. Bankruptcy Judge Steven Rhodes. According to The Associated Press, an early draft of the plan called for city pensioners to receive $4.3 billion in payments and bondholders about $1.1 billion during the next 40 years.
That draft also detailed plans to help pensioners keep more of what they are owed by using state and private funds to protect against the sale of city-owned art at the Detroit Institute of Arts, the AP said.
Even before Detroit officially filed the papers, a court agreed to hear appeals from a slew of petitioners, including pension plans for police and firefighters, over whether Detroit was even eligible to file for bankruptcy. A federal judge granted it permission in December to forge ahead with Chapter 9, which provides protection from creditors while a financially strapped municipality restructures its debt.
Source: NBC news
