CHICAGO -- Detroit wants to file a long-awaited debt adjustment plan with the bankruptcy court next week.
U.S. Bankruptcy Judge Steven Rhodes, who is overseeing the city's Chapter 9 case, has imposed a deadline of March 1 for the city to file the plan, which will outline Detroit's proposed treatment of creditors.
The city had originally hoped to file by the end of 2013, then later moved the target date to mid-January.
Detroit's attorneys say they're almost there.
"We expect it to be filed next week," Jones Day attorney Bruce Bennett told Rhodes Monday morning, according to local accounts of the court hearing.
Creditors will vote on the plan after it is filed. The city needs to reach approval from a class of creditors who make up two-thirds of the amount of debt and over half by number. Ultimately, if they reach that number, and Rhodes approves, the remainder of the creditors would be subject to a cram down.
Ahead of the plan, the city is reportedly holding a series of closed-door meetings with creditors early this week. It will also meet Tuesday with state government officials and a group of county executives to try to hammer out a final agreement on a $1.9 billion plan to lease the city's water and sewer department to a new authority.
Detroit two weeks ago floated a draft plan of adjustment to creditors ahead of final negotiations. The 99-page document was filled with placeholders, but incorporated a plan to pay pensioners, through the city pension plans, more than general obligation bondholders.
The pensioners would have access to an additional $800 million of money raised by private foundations and the state in a deal that would also protect the city's prized art collection from a sale or other monetization during bankruptcy.
Monday's hearing was a status update on a dispute between the city and bond insurers National Public Finance Guarantee Corp. and Ambac Assurance Corp.
Ambac and National have filed a joint lawsuit arguing that it's illegal for Detroit to use money raised under a voter-approved separate levy for any purpose other than for unlimited-tax GO debt service. Ambac also filed its own lawsuit challenging the city's treatment of its limited-tax GOs as unsecured.
The city and insurers have been in mediation on and off since November. Rhodes has set a Feb. 19 hearing on the issue.
