(Source: Wikimedia Commons)
The City of Detroit filed its plan to restructure an estimated $11 billion in unsecured debt today, with expected cuts to fire and police pensions, as well as general retirees.
The plan will likely be amended as the city continues to wend its way through the largest Chapter 9 bankruptcy proceeding in the nation's history. In order for the plan to be implemented, it must be approved by U.S. Bankruptcy Judge Steven Rhodes.
Along with the debt-cutting plan, the city proposed a 10-year plan to pour $1.5 billion into city services, blight removal and public safety.
Retirees' monthly pensions checks, as anticipated, would take a hit under the plan: The city proposed a 34 percent cut to general city retirees, and a 10 percent cut to police and fire pensions.
The plan, filed by Detroit Emergency Manager Kevyn Orr, banks on the approval of a "grand bargain
" proposal to raise more than $800 million from nonprofit foundations, the state, and the Detroit Institute of Arts. Orr's office says today the funds would be spread out over 20 years. Discussions surrounding Detroit's water department being spun off to a regional authority
and a costly interest-rate swaps deal, both an integral part to the city's bankruptcy-exit plan, are still ongoing, Orr's office says.
Detroit's 120 page Plan of Adjustment
Detroit Disclosure Statement