Posted on 06/16/2013 8:36:00 AM PDT by SeekAndFind
A team led by a state-appointed emergency manager said Friday that Detroit is defaulting on about $2.5 billion in unsecured debt and is asking creditors to take about 10 cents on the dollar of what the city owes them.
Kevyn Orr spent two hours with about 180 bond insurers, pension trustees, union representatives and other creditors in a move to avoid what bankruptcy experts have said would be the largest municipal bankruptcy in U.S. history.
Underfunded pension claims likely would get less than the 10 cents on the dollar.
An assessment of the plan's progress will come in the next 30 days or so.
Orr also announced that Detroit stopped paying on its unsecured debt Friday to "conserve cash" for police, fire and other services in the city of 700,000 people. The debt not being paid includes $39 million owed to a certificate of participation.
"We will not pay that today," Orr told reporters after the meeting with creditors at a hotel at Detroit Metropolitan Airport in Romulus.
More than 42 percent of Detroit's 2013 revenue went to required bond, pension, health care and other payments. If the city continues operating the way it did before Orr arrived, those costs would take up nearly 65 percent of city spending by 2017, Orr's team said.
The team also said the proposal presented Friday is the one shot to permanently fix fiscal problems that have made the city insolvent.
Orr said everyone involved needs to come to grips with Detroit's dire financial situation that has been worsened by years of procrastination and denial. He said his team is prepared for potential lawsuits from creditors not pleased with the arrangements under the plan.
(Excerpt) Read more at cbsnews.com ...
I wonder if anybody has the fantasy that Chicago will pay what it owes, or St Louis, LA, Philly.....
Sorry kids but the only other options are federal bailouts.
wow shocked NOT
And the public employee pension fund managers were given a heads up on this decision weeks ago with just enough time to unload these bonds before today’s announcement.
Uh-Huh
Bet getting people to invest in new bonds is gonna be impossible.
Maybe I’ll try that with my creditors. “Sorry guys. I’ve decided that even though I owe you the money, I’ve decided I’m not going to pay”. Wonder how that’ll work out for me. LOL! Now, if I was a registered demokkkrat it’d probably be just fine.
So... what happens when Zero asks China to accept ten cents on the dollar in exchange for our Chinese debt?
Just following the lead of Der Dufus.
What sort of imbecile would lend money to Detroit?
Okay how about the city would be required to purchase an insurance policy to insure they can cover their liabilities.
The insurance company could then audit and evaluate the cities current operation and charge a premium based on that evaluation.
OK
FMCDH(BITS)
It’s the old adage: If I owe you a thousand dollars I can’t pay, I’m screwed. If I owe you a billion dollars and can’t pay, you’re screwed.
Too soon to tell, but this may turn out differently from the GM bailout, with unions and their pension funds taking a good part of the hit.
It would be nice if the emergency manager used the bankruptcy to cancel the union contracts.
Call it a “comprehensive” plan, Kevyn, and it’s all good.
Or maybe declare Motown a ‘creditor-free’ zone?
RE: What sort of imbecile would lend money to Detroit?
Those who think the bond is “safe” because the Feds will come in to bail the city out... WE SHALL SEE...
Then new, smaller communities would incorporate in Wayne County consisting of various parts of the former Detroit. These communities would be viable and could start all over again.
This model could then be used when other cities, such as Philadelphia, collapse.
Where’s that Obama Money????LOL
Sorry kids but the only other options are federal bailouts.
I have no doubt the idea of feral government bail-outs of Democratic [sic] party bankrupt cities will be raised; I have even less doubt the rest of the nation is not going to be willing to pick up the tab for the looters. That idea could—and should—lead to secession.
I hope the unions invested heavily in that debt. It’d be a win-win!
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