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 Labor unions, bond insurers, bondholders, city retiree groups and
Michigan county governments met Monday's deadline set by the court
and filed laundry lists of objections to the city's disclosure
statement. That statement explains how Detroit came to file the
biggest municipal bankruptcy in U.S. history in July 2013 and how
the city plans to treat its scores of secured and unsecured
creditors in order to exit bankruptcy.
Detroit's biggest union, the American Federation of State, County
and Municipal Employees Council 25, whose members face cuts in
retirement benefits, wrote that "the city has failed to provide
large amounts of critical information."
The union also said the city was remiss in not addressing any
fallout from pension cuts.
"The city must disclose the risk that its financial projections do
not properly take into account the added poverty rolls it may need
to support, and further, the effect of such pension cuts on the
morale of the AFSCME employees, the likely increase in crime and
decaying social atmosphere, and all that comes with the proposed
pension cuts," the union's filing said.
Judge Steven Rhodes, who is overseeing Detroit's historic bankruptcy
case, has set an April 14 deadline for the city to respond to the
objections and an April 17 hearing on any unresolved objections to
the revised disclosure statement the city filed with the court on
March 31.
Several filings cited the lack of detail on the value of city assets
that could be tapped to increase payments to creditors. Those
included collections at the Detroit Institute of Arts. Money pledged
by a group of philanthropic foundations and potentially from the
state of Michigan would be used to aid the city's retirees to avoid
a fire sale of art works, under Detroit's debt adjustment plan.
Syncora Guarantee Inc, a bond insurer that has been battling Detroit
on many fronts, including the city's desire to terminate interest
rate swap agreements with two investment banks, claimed the city has
been "stonewalling" creditors throughout the bankruptcy process.
"The city's creditors have no basis on which to assess the amended
plan's impact on their rights, or the nature, value, and risk of
proposed creditor recoveries under the amended plan," Syncora's
filing stated.
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Michigan counties of Oakland and Macomb cited inadequate information
on city's plans to deal with the regional water and sewer department
that affect their residents.
An ad hoc committee of Detroit bondholders noted in a filing that
the city's plan lists various options for the more than $5.5 billion
of outstanding water and sewer debt. Those options include the
issuance of new bonds by the city, a new regional water and sewer
authority, or a private third party that may own, lease or hold a
concession for the utilities, according to the filing.
"Unfortunately, almost nine months after it filed for chapter 9, and
only 10 days before its disclosure statement hearing, the city
remains unable to solidify what plan it wishes to pursue for the
systems and the (water and sewer) bonds, or any substantial details
for that plan," stated the filing by bondholders Nuveen Asset
Management, BlackRock Asset Management, Fidelity Management &
Research Company, Eaton Vance Management, and Franklin Advisers,
Inc.
The city's solicitation of entities interested in bidding to operate
and manage water and sewer services attracted 41 initial responses
by Monday, the deadline set by Detroit, according to Bill Nowling, a
spokesman for Detroit Emergency Manager Kevyn Orr.
(Reporting by Karen Pierog; editing by Steve Orlofsky and Ken Wills)
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