DETROIT Jan 22 The judge overseeing Detroit's
bankruptcy denied a request from creditors to have an official
say in valuing the city's art collection and said he will
announce his decision next Tuesday on a request from Detroit
retirees to block cuts to their healthcare.
Rhodes said he did not have the legal authority to approve
the creation of the creditors' committee that would have
examined the works of the Detroit Institute of Arts.
But even if he could have legally done so, Rhodes said he
would not have approved the creation of the committee because
discussion of the art should wait until after Detroit submits
its plan of adjustment to the court by March 1.
Rhodes implored the city and its creditors to do their best
to negotiate settlements before that deadline.
"Now is not the time for defiant swagger or for dismissive
pound-the-table-take-it-or-leave-it proposals," Rhodes said.
He said it was critical for the city and its creditors to
reach agreements that will not further cripple the city and
allow it to recover financially.
"The court will not permit the confirmation of the city's
plan to be another bad deal like all the other ones the city
entered into of which we are now all too familiar," Rhodes said.
"The plan must be feasible."
Detroit, which filed the largest municipal bankruptcy in
U.S. history, is struggling under more than $18 billion in debt,
including, it says, $5.7 billion in liabilities for healthcare
and other retiree benefits.
To deal with its healthcare burden, the city has proposed
that retirees over 65 would be moved to Medicare and those under
the age of 65 would be given a monthly stipend to purchase
insurance through the exchanges of the Affordable Care Act.
The changes to Detroit retiree healthcare are scheduled to
take place on March 1.
Attorney Sam Alberts, representing the Official Committee of
Detroit Retirees, said in court Wednesday morning that the
city's plan was "such a reduction in healthcare that it violates
But Rhodes, who is overseeing the case, questioned why the
retirees' health care claims against the city should get special
"I've got adversaries from financial creditors claiming the
same special or elevated treatment," Rhodes said during the
hearing Wednesday morning. "I've got the swap counterparties
claiming hundreds of millions of dollars. I've got a debtor who
arguably can't pay any of it. What do I do except deal with all
of these claims of special treatment in the context of a plan?"
In response, Alberts said that "for these people who don't
get healthcare, it's literally life or death."
The healthcare cuts have been subject to mediation
discussions, but Alberts said the negotiations over healthcare
had "basically fallen off the table since December."
"There has been no effort to reach an accord in the
interim," Alberts said.
Mediation sessions were ongoing Tuesday and Wednesday, but
those discussions, which are confidential, have been focused on
the city's pension liabilities, Detroit attorney Heather Lennox
said in court.
In his closing charge to the city and its creditors
Wednesday afternoon, however, Rhodes said that in order for a
plan to be feasible, the city might need to make "a fundamental
and profound change" to health benefits and pensions.