DETROIT Detroit's emergency manager, Kevin Orr, on Thursday said in testimony before a U.S. bankruptcy court that he wants the city to exit bankruptcy by October 15, just weeks after his 18-month term as state-appointed emergency manager is scheduled to end.
The city's Chapter 9 bankruptcy case, the biggest in U.S. history, was filed in July 2013 amid high hopes expressed by the Kevin Orr that the bankruptcy would speed along. Instead, the case has largely limped along as scores of city creditors objected to pension cuts and other critical proposals.
At Thursday's hearing, attorneys for a bond insurer, bondholders and the city's retired workers grilled Orr about a $85 million proposed payment to UBS AGand Merrill Lynch Capital Services to terminate soured swaps that were used to hedge interest rate risk on Detroit's pension debt.
Objections to the deal included concerns the two investment banks would fare better than Detroit's other creditors and that the city should instead pursue litigation against the banks.
Orr testified that resolving the swaps was in the best interest of the city as opposed to the cost of challenging the swap agreements in court.
"It was significant. It could be millions of dollars a month," Orr said.
Objecting creditors are also worried that the banks' intention to support Orr's proposed debt adjustment plan could be used to force the plan on them.
Judge Steven Rhodes, who is overseeing the bankruptcy, rejected, as too costly, two previous proposed swap settlements that carried bigger price tags.
Late on Wednesday, Rhodes issued his third revision of a schedule to confirm Detroit's plan to deal with its $18 billion of debt and other obligations. The revision extends some key filing dates ahead of a trial on the plan that would start on July 16.
(Reporting By Cherie Curry in Detroit; additional reporting by Karen Pierog in Chicago; Editing by Steve Orlofsky)