CHICAGO Detroit’s retirees and employees endorsed the city’s proposed plan of adjustment while holders of the city’s limited tax general obligation bond holders and certificates of participation rejected it, according to the voting results
The plan would eliminate about $7.4 billion of the $18 billion debt load the city carried when it entered its historic Chapter 9 bankruptcy a year ago. It calls for $1.7 billion in reinvestment initiatives.
A trial on the plan and the city’s confirmation is scheduled before U.S. Bankruptcy Judge Steven Rhodes on Aug. 14. The city hopes to exit bankruptcy in October.
“The voting shows strong support for the city’s plan to adjust its debts and for the investment necessary to provide essential services and put Detroit on secure financial footing,” the city’s emergency manager, Kevyn Orr, said in a statement, clearing the way for the “final phase” of the city bankruptcy.
The limited tax GO bondholders rejected the plan while a class of unlimited tax GObondholders the city lumped in the unsecured category approved it, according to the results.
Holders of the city’s nearly $1.5 billion of pension-related certificates of participation debt voted against the plan. The bank counterparties on the city’s swaps tied to the COPs approved the plan. Insurers cover much of the debt and settlements have been struck with some or are in the works.
The support of the retirees was spurred by the so-called grand bargain that relies on state financial support and not-for-profit foundations aimed at easing retiree cuts and preserving the assets of the Detroit Institute of Arts by placing the museum in a protective trust.
Retirees in a separate ballot approved a proposed 90% cut in their health care benefits. The deadline for voting on the plan was July 11.
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