Tags: unions | bankruptcy | Detroit | Orr

Detroit Manager Says City May Exit Bankruptcy by October

Thursday, 03 Apr 2014 01:02 PM

Detroit’s emergency financial manager, Kevyn Orr, said the city may be able to conclude its record $18 billion bankruptcy in October, less than 18 months after seeking court protection from creditors.

Orr told U.S. Bankruptcy Judge Steven Rhodes today that Detroit was “hoping” to exit by Oct. 15. Michigan’s biggest city filed for bankruptcy in July after decades of decline, saying it couldn’t pay creditors while also providing essential services to its 700,000 residents.

The emergency manager was in court today to seek approval of an $85 million settlement with UBS AG and Bank of America Corp. to end interest-rate swaps that have cost taxpayers $200 million since 2009. He said that by Jan. 31, after earlier settlements fell through, he was prepared to sue if the banks didn’t accept less than $100 million.

Orr said he instructed his negotiating team to tell the banks: “You’ve got to be below 100 to be serious.”

He said he canceled plans for a suit after the banks agreed to negotiate a lower amount. Both sides agreed to the $85 million payment, in installments, to end swaps that normally would have cost the bankrupt city $288 million to terminate.

Syncora Guarantee Inc., which insures some city debts, objected to the swaps settlement, saying the new agreement violates its legal rights related to the swaps.

The swaps are just one of the many issues Orr is trying to resolve before September, when the city council can remove him from his post. Unions and retiree groups have objected to Orr’s proposal to cut pensions for public workers. The city has also said it plans to pay some bondholders 15 cents on the dollar.

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Detroit's emergency financial manager, Kevyn Orr, said the city may be able to conclude its record $18 billion bankruptcy in October, less than 18 months after seeking court protection from creditors.
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2014-02-03
Thursday, 03 Apr 2014 01:02 PM
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