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Old Posted Nov 8, 2014, 4:10 AM
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Detroit approved for bankruptcy exit

Judge Rhodes issues decision in Detroit bankruptcy case



The City of Detroit's bankruptcy plan was approved by U.S. Bankruptcy Judge Steven Rhodes mid-Friday paving the way for the end for the country's largest municipal bankruptcy.

The plan calls for Detroit to shed nearly 75% of its unsecured debt and investing $1.7 billion dollars into improving city services and demolishing blight.

General retirees will take a 4.5% cut on their pensions and retired police and firefighters will get a reduction in annual inflationary increases.

To soften the blow to the pension cuts a "grand bargain" was created that pumps nearly $816 million dollars into the pension funds - covered by private donations from local corporations and non-profits with nearly $200 million dollars from the state of Michigan. The grand bargain also protects the city's art collection from being sold.

The bankruptcy took no more than 16 months to complete from the day it was filed and leaves the city with a financial breathing room, but not without sacrifice and deals from creditors and pensioners.

For the next 10 years, the state of Michigan will monitor Detroit's finances and has the power to veto spending decisions made the Detroit City Council and Mayor. An investment committee will also oversee the city's two pension boards.

All in all, everyone involved, from creditors and investors to residents and politicians, seem happy with the outcome and optimistic on Detroit's future. Time will tell what this new Detroit will be.
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