The complicated Detroit municipal bankruptcy case cleared key hurdles this week, and it appears creditors will have their say on a restructuring plan much sooner than many experts originally predicted.
Information on the proposed Detroit restructuring package is being prepped for release to creditors as early as Monday, according to various reports. This follows this week’s deal between the city and two police unions and a ruling by U.S. Bankruptcy Court Judge Steven Rhodes that documents could be sent to creditors. They will have 60 days to vote following the official mail date of the information packets, expected to be May 12 at this point.
The development sticks to the word of Rhodes, who vowed to set a fast timetable for resolution of the city’s bankruptcy, the largest municipal bankruptcy case in US history. The matter is of keen interest nationally because of its potential implications for many US cities struggling with escalating debt problems tied primarily to retiree benefits such as pensions and health insurance. Moody’s Investors Service previously predicted a high potential for a significant “cram-down” on some types of creditors, though trade creditors dealing with the city have quietly remained confident that they would keep doing business close to usual and getting paid without egregious delays.
- Brian Shappell, CBA, CICP, NACM staff writer