CHICAGO — The Michigan Settlement Authority, a newly created body overseeing distribution of state aid to Detroit as part of the city's bankruptcy exit plan, held its first meeting Oct. 17 in Lansing.

The authority named State Treasurer Kevin Clinton as chair and took various other organizational steps.

The board will be responsible for disbursing $195 million of state aid to Detroit's two pension systems as part of the so-called "grand bargain" that is the cornerstone of its plan to exit from Chapter 9 bankruptcy. The grand bargain, which features an additional roughly $610 million in private contributions, will boost the city's pensions in exchange for protecting the city's art collection by transferring it into a private trust.

The state will begin to disburse its funds only after the federal judge overseeing the case approves the plan of confirmation, officials said.

"This is a small but significant step in the state's continued support for the City of Detroit and its retirees," Clinton said in a statement. "Many people and organizations from across the entire state have pulled together and pooled their resources to significantly lessen the potential impact of bankruptcy on current and past city employees."

Other board members are State Budget Director John Roberts and retired bankruptcy attorney I. William Cohen of Huntington Woods.

The state is expected to tap its rainy-day fund to make the payment.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.