Welcome!

News Feed Item

City of Detroit Files Plan of Adjustment and Related Disclosure Statement

Plan is Critical Step to Create a Solvent Detroit that Can Meet Realistic Obligations and Once Again Become a Productive, Vibrant American City

DETROIT, Feb. 21, 2014 /PRNewswire/ -- Kevyn Orr, the Emergency Manager for the City of Detroit ("Detroit" or the "City"), today filed the City's Plan of Adjustment ("Plan") and a related Disclosure Statement with the United States Bankruptcy Court for the Eastern District of Michigan ("Bankruptcy Court").  The Plan and Disclosure Statement provide the details of the City's proposal to (i) adjust up to as much as $18 billion in secured and unsecured debt, (ii) implement a necessary 10-year plan to invest in the City and improve essential services and public safety for its 700,000 residents and (iii) restore its heritage as a productive, vibrant American city.

Mr. Orr and his team are confident that the filing of the Plan is the most effective and efficient method to reorganize the City's financial affairs, provide an opportunity for the City to revitalize itself and continue efforts to once again make Detroit an attractive place in which to live, work and invest.  As part of the Plan, the City will devote $1.5 billion over 10 years to capital improvements, blight removal and equipment and technology upgrades.  This investment will result in improved services and public safety and the clearance of blighted and abandoned properties.  Up to $500 million of the $1.5 billion will be dedicated to blight removal over the next five years.

The anticipated recovery for creditors is related to the limited resources the City has to pay, consistent with its responsibility to provide municipal services to its residents.  The Plan generally proposes to provide unsecured, non-retiree creditors with (i) an approximately 20% recovery on their claims in the form of new securities to be issued by the City and (ii) a potential increase to that recovery through sharing in substantially increased revenues realized by a revitalized City. 

"My advisers and I have now expended many months in negotiations, including within Bankruptcy Court-mandated mediations, with all classes of creditors to get to this point, and we are satisfied with the progress made thus far," said Mr. Orr.  "However, there is still much work in front of all of us to continue the recovery from a decades-long downward spiral.  We must move swiftly to emerge from bankruptcy so that the financial distress harming the City can end.  We maintain that the Plan provides the best path forward for all parties to resolve their respective issues and for Detroit to become once again a city in which people want to invest, live and work."

The Plan also protects retirees, including those on fixed and limited incomes.  The Plan assumes that a settlement is reached with respect to the City's art assets that would permit $465 million in funding to flow from third party donors and the DIA Corp. into the City's two pension funds over 20 years, subject to the negotiation of definitive agreements and the City's and the Retirement Funds' compliance with certain conditions.  The Plan also assumes that the State of Michigan ("State") will contribute up to $350 million to the City's two pension funds over 20 years under certain settlement conditions.  It is expected that certain of the settlement funds anticipated to be provided by the State will be reserved to ensure that retirees whose household income is at or relatively near the federal poverty level will not fall below that level.  This is to ensure that retirees can continue to meet their needs and maintain their current quality of life.

Although pensions still need to be reduced even in light of these significant outside funds, if police and fire retirees agree to the Plan and a proposed settlement with the State, they would likely receive in excess of 90% of their earned pensions after elimination of cost of living allowances.  General retirees who agree to the Plan and a proposed settlement with the State would likely receive in excess of 70% of their pensions after elimination of cost of living allowances.  Detroit's current employees would continue to earn pensions payable in the future under traditional defined benefit formulas rather than defined contribution arrangements.  Moreover, the two pension funds would operate under more conservative investment return assumptions, which will result in pension contribution predictability and stability – critical elements as the City must be assured that it will have sufficient funds for operations and its $1.5 billion investment program in the future. 

The City's filing of the Plan will continue its momentum toward reaching agreements with its key creditors and, to that end, Mr. Orr and his advisers intend to continue their commitment to the federal mediation process led by Chief U.S. District Judge Gerald Rosen and his team of mediators.  Discussions surrounding a costly interest-rate swaps agreement and the formation of a regional water and sewer agency are ongoing.

A summary of the Plan, along with additional information and links relating to the Chapter 9 case, can be found at http://www.detroitmi.gov/EmergencyManager.aspx.  Bankruptcy Court filings are available online, free of charge, at http://kccllc.net/Detroit.

Miller Buckfire & Co., Jones Day, Ernst & Young and Conway MacKenzie Inc. are advising the City of Detroit on its restructuring.

SOURCE City of Detroit

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Recently, REAN Cloud built a digital concierge for a North Carolina hospital that had observed that most patient call button questions were repetitive. In addition, the paper-based process used to measure patient health metrics was laborious, not in real-time and sometimes error-prone. In their session at 21st Cloud Expo, Sean Finnerty, Executive Director, Practice Lead, Health Care & Life Science at REAN Cloud, and Dr. S.P.T. Krishnan, Principal Architect at REAN Cloud, discussed how they built...
Recently, WebRTC has a lot of eyes from market. The use cases of WebRTC are expanding - video chat, online education, online health care etc. Not only for human-to-human communication, but also IoT use cases such as machine to human use cases can be seen recently. One of the typical use-case is remote camera monitoring. With WebRTC, people can have interoperability and flexibility for deploying monitoring service. However, the benefit of WebRTC for IoT is not only its convenience and interopera...
In his general session at 21st Cloud Expo, Greg Dumas, Calligo’s Vice President and G.M. of US operations, discussed the new Global Data Protection Regulation and how Calligo can help business stay compliant in digitally globalized world. Greg Dumas is Calligo's Vice President and G.M. of US operations. Calligo is an established service provider that provides an innovative platform for trusted cloud solutions. Calligo’s customers are typically most concerned about GDPR compliance, application p...
Modern software design has fundamentally changed how we manage applications, causing many to turn to containers as the new virtual machine for resource management. As container adoption grows beyond stateless applications to stateful workloads, the need for persistent storage is foundational - something customers routinely cite as a top pain point. In his session at @DevOpsSummit at 21st Cloud Expo, Bill Borsari, Head of Systems Engineering at Datera, explored how organizations can reap the bene...
With tough new regulations coming to Europe on data privacy in May 2018, Calligo will explain why in reality the effect is global and transforms how you consider critical data. EU GDPR fundamentally rewrites the rules for cloud, Big Data and IoT. In his session at 21st Cloud Expo, Adam Ryan, Vice President and General Manager EMEA at Calligo, examined the regulations and provided insight on how it affects technology, challenges the established rules and will usher in new levels of diligence arou...
Continuous Delivery makes it possible to exploit findings of cognitive psychology and neuroscience to increase the productivity and happiness of our teams. In his session at 22nd Cloud Expo | DXWorld Expo, Daniel Jones, CTO of EngineerBetter, will answer: How can we improve willpower and decrease technical debt? Is the present bias real? How can we turn it to our advantage? Can you increase a team’s effective IQ? How do DevOps & Product Teams increase empathy, and what impact does empath...
"I focus on what we are calling CAST Highlight, which is our SaaS application portfolio analysis tool. It is an extremely lightweight tool that can integrate with pretty much any build process right now," explained Andrew Siegmund, Application Migration Specialist for CAST, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
SYS-CON Events announced today that Evatronix will exhibit at SYS-CON's 21st International Cloud Expo®, which will take place on Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Evatronix SA offers comprehensive solutions in the design and implementation of electronic systems, in CAD / CAM deployment, and also is a designer and manufacturer of advanced 3D scanners for professional applications.
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...
As many know, the first generation of Cloud Management Platform (CMP) solutions were designed for managing virtual infrastructure (IaaS) and traditional applications. But that's no longer enough to satisfy evolving and complex business requirements. In his session at 21st Cloud Expo, Scott Davis, Embotics CTO, explored how next-generation CMPs ensure organizations can manage cloud-native and microservice-based application architectures, while also facilitating agile DevOps methodology. He expla...
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
DevOps promotes continuous improvement through a culture of collaboration. But in real terms, how do you: Integrate activities across diverse teams and services? Make objective decisions with system-wide visibility? Use feedback loops to enable learning and improvement? With technology insights and real-world examples, in his general session at @DevOpsSummit, at 21st Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, explored how leading organizations use data-driven DevOps to close th...
Most technology leaders, contemporary and from the hardware era, are reshaping their businesses to do software. They hope to capture value from emerging technologies such as IoT, SDN, and AI. Ultimately, irrespective of the vertical, it is about deriving value from independent software applications participating in an ecosystem as one comprehensive solution. In his session at @ThingsExpo, Kausik Sridhar, founder and CTO of Pulzze Systems, discussed how given the magnitude of today's application ...
You know you need the cloud, but you're hesitant to simply dump everything at Amazon since you know that not all workloads are suitable for cloud. You know that you want the kind of ease of use and scalability that you get with public cloud, but your applications are architected in a way that makes the public cloud a non-starter. You're looking at private cloud solutions based on hyperconverged infrastructure, but you're concerned with the limits inherent in those technologies. What do you do?
Sanjeev Sharma Joins June 5-7, 2018 @DevOpsSummit at @Cloud Expo New York Faculty. Sanjeev Sharma is an internationally known DevOps and Cloud Transformation thought leader, technology executive, and author. Sanjeev's industry experience includes tenures as CTO, Technical Sales leader, and Cloud Architect leader. As an IBM Distinguished Engineer, Sanjeev is recognized at the highest levels of IBM's core of technical leaders.