Judge Steven Rhodes ruled that the latest version of the so-called
disclosure statement Detroit filed with the court earlier on Monday
contains "adequate information" for creditors. He also prohibited
the city from making anything but "non-substantive or immaterial
changes" to the document.
The approval marks another hurdle cleared by the bankrupt city as it
plans by May 12 to begin soliciting votes on the debt plan from its
thousands of creditors.
Kevyn Orr, Detroit's state-appointed emergency manager, has been
reeling in agreements over the last several weeks with key creditors
including the city's two retirement systems, retired worker
associations and bond insurance companies.
In the latest version of the disclosure statement, Detroit revealed
that it reached five-year agreements with two of its police unions.
While the Detroit Police Lieutenants and Sergeants Association and
the Detroit Police Command Officers Association agreed on terms
governing pensions, wages and healthcare for their members, the
city's bigger public safety unions - the Detroit Police Officers
Association and Detroit Fire Fighters Association - have not.
Still, in the disclosure statement, the city outlined pension
proposals for the two holdout unions that were less generous than
the firm agreements.
The city would make greater contributions to the command officers
and sergeant and lieutenants' pensions and allow them to retire at
younger ages than the firefighters and police officers. Members of
the two settling unions would get 1 percent cost of living
adjustments for their pensions while members of the holdout unions
would see none.
All the deals involving pensions for current and retired city
workers hinge on $816 million the city would tap to aid its retired
workers. Michigan Governor Rick Snyder has asked the state
legislature to approve $350 million of that amount, while the rest
would come from philanthropic foundations and the Detroit Institute
of Arts, which pledged the money to avoid a fire sale of art works
due to the bankruptcy.
[to top of second column]
Michigan could make its contribution in two ways: spread out over 20
years or in a single payment. The "lump sum" would actually be a
little under $195 million, which is the net present value of the
pledged amount at a discount rate of 6.75 percent, according to Sara
Wurfel, Snyder's press secretary.
"This is one of the key areas - funding source and all related
details - we'll be discussing with the legislature over the next
days and weeks," said Wurfel.
Previously announced settlements over interest-rate swaps and the
treatment of voter-approved unlimited tax general obligation bonds
are included in the latest filing. However, other matters that have
been subject to court-ordered mediation are not and those include
the treatment of limited-tax GO bonds and the creation of a regional
(Reporting by Bernie Woodall in Detroit, additional reporting by
Karen Pierog in Chicago and Lisa Lambert in Washington; editing by
James Dalgleish and Matthew Lewis)
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