(Adds details on disclosure statement, additional filings,
number of responses city received for its water and sewer
April 7 Creditor objections flowed into a U.S.
bankruptcy court on Monday, claiming a document supporting
Detroit's plan to deal with $18 billion of debt and other
obligations is missing crucial details.
Labor unions, bond insurers, bondholders, city retiree
groups and Michigan county governments met Monday's deadline set
by the court and filed laundry lists of objections to the city's
disclosure statement. That statement explains how Detroit came
to file the biggest municipal bankruptcy in U.S. history in July
2013 and how the city plans to treat its scores of secured and
unsecured creditors in order to exit bankruptcy.
Detroit's biggest union, the American Federation of State,
County and Municipal Employees Council 25, whose members face
cuts in retirement benefits, wrote that "the city has failed to
provide large amounts of critical information."
The union also said the city was remiss in not addressing
any fallout from pension cuts.
"The city must disclose the risk that its financial
projections do not properly take into account the added poverty
rolls it may need to support, and further, the effect of such
pension cuts on the morale of the AFSCME employees, the likely
increase in crime and decaying social atmosphere, and all that
comes with the proposed pension cuts," the union's filing said.
Judge Steven Rhodes, who is overseeing Detroit's historic
bankruptcy case, has set an April 14 deadline for the city to
respond to the objections and an April 17 hearing on any
unresolved objections to the revised disclosure statement the
city filed with the court on March 31.
Several filings cited the lack of detail on the value of
city assets that could be tapped to increase payments to
creditors. Those included collections at the Detroit Institute
of Arts. Money pledged by a group of philanthropic foundations
and potentially from the state of Michigan would be used to aid
the city's retirees to avoid a fire sale of art works, under
Detroit's debt adjustment plan.
Syncora Guarantee Inc, a bond insurer that has been battling
Detroit on many fronts, including the city's desire to terminate
interest rate swap agreements with two investment banks, claimed
the city has been "stonewalling" creditors throughout the
"The city's creditors have no basis on which to assess the
amended plan's impact on their rights, or the nature, value, and
risk of proposed creditor recoveries under the amended plan,"
Syncora's filing stated.
Michigan counties of Oakland and Macomb cited inadequate
information on city's plans to deal with the regional water and
sewer department that affect their residents.
An ad hoc committee of Detroit bondholders noted in a
filing that the city's plan lists various options for the more
than $5.5 billion of outstanding water and sewer debt. Those
options include the issuance of new bonds by the city, a new
regional water and sewer authority, or a private third party
that may own, lease or hold a concession for the utilities,
according to the filing.
"Unfortunately, almost nine months after it filed for chapter
9, and only 10 days before its disclosure statement hearing, the
city remains unable to solidify what plan it wishes to pursue
for the systems and the (water and sewer) bonds, or any
substantial details for that plan," stated the filing by
bondholders Nuveen Asset Management, BlackRock Asset Management,
Fidelity Management & Research Company, Eaton Vance Management,
and Franklin Advisers, Inc.
The city's solicitation of entities interested in bidding to
operate and manage water and sewer services attracted 41 initial
responses by Monday, the deadline set by Detroit, according to
Bill Nowling, a spokesman for Detroit Emergency Manager Kevyn
(Reporting By Karen Pierog; Editing by Steve Orlofsky and Ken