CHICAGO -- Detroit's emergency manager said Wednesday he has presented the city's creditors with a proposed plan of adjustment, a key milestone in the historic Chapter 9 bankruptcy case.
The plan was not made public; emergency manager Kevyn Orr said he plans to file the plan with the bankruptcy court within the next two weeks.
The bankruptcy plan proposes how the city wants to treat each class of creditors, and is a key part of any Chapter 9 case. The city had hoped to file the proposal by the end of December, but was delayed for several weeks. Bankruptcy Judge Steven Rhodes has set a deadline of March 1 for the city to file.
The proposal comes as the city is still in the midst of mediation with several of its creditors to try to reach out-of-court settlements.
It is also trying to achieve deals on the spinoff of its massive water and sewer system and a proposal by a group of foundations and the state to raise funds for the city's pensions while protecting its art collection. Both of those settlements are expected to play a crucial role in the city's final restructuring.
"The plan distributed to creditors participating in the court-ordered mediation reflects some of the discussions the city and its creditors have held to date and offers a good platform for those discussions moving forward," Orr's office said in a statement.
"The negotiations and the federal mediation process have been progressing well, as evidenced by the city's entry into a five-year contract with the city's EMS union," the statement said. "Also, the city is gratified by the tremendous efforts of the mediators in generating the proposed financial support by the state of Michigan and several philanthropic organizations that will help support the city's public employee pension funds and help resolve issues surrounding the Detroit Institute of Arts. Additional recent accomplishments in the restructuring process include an agreement to transfer the long-challenged City electrical grid to DTE Energy, and the beginning of blight removal and restoration of public lighting."
Orr called the plan a road map for the city and its creditors.
"Time is of the essence - the longer we remain entrenched in our positions and fail to reach an agreement, the worse life gets for Detroit's 700,000 residents and the greater our collective challenges become," he said. "We need to move quickly and efficiently. My team and I believe this plan presents each interested party with fair and equitable treatment, and we look forward to working with our creditors to adopt this plan and put Detroit back on the path to stability and success."
