(Adds details of disclosure statement, DETROIT dateline)
DETROIT May 5 A U.S. Bankruptcy Court judge on
Monday approved a key supporting document for Detroit's plan to
adjust $18 billion of debt and exit the biggest municipal
bankruptcy in U.S. history.
Judge Steven Rhodes ruled that the latest version of the
so-called disclosure statement Detroit filed with the court
earlier on Monday contains "adequate information" for creditors.
He also prohibited the city from making anything but
"non-substantive or immaterial changes" to the document.
The approval marks another hurdle cleared by the bankrupt
city as it plans by May 12 to begin soliciting votes on the debt
plan from its thousands of creditors.
Kevyn Orr, Detroit's state-appointed emergency manager, has
been reeling in agreements over the last several weeks with key
creditors including the city's two retirement systems, retired
worker associations and bond insurance companies.
In the latest version of the disclosure statement, Detroit
revealed that it reached five-year agreements with two of its
While the Detroit Police Lieutenants and Sergeants
Association and the Detroit Police Command Officers Association
agreed on terms governing pensions, wages and healthcare for
their members, the city's bigger public safety unions - the
Detroit Police Officers Association and Detroit Fire Fighters
Association - have not.
Still, in the disclosure statement, the city outlined
pension proposals for the two holdout unions that were less
generous than the firm agreements.
The city would make greater contributions to the command
officers and sergeant and lieutenants' pensions and allow them
to retire at younger ages than the firefighters and police
officers. Members of the two settling unions would get 1 percent
cost of living adjustments for their pensions while members of
the holdout unions would see none.
All the deals involving pensions for current and retired
city workers hinge on $816 million the city would tap to aid its
retired workers. Michigan Governor Rick Snyder has asked the
state legislature to approve $350 million of that amount, while
the rest would come from philanthropic foundations and the
Detroit Institute of Arts, which pledged the money to avoid a
fire sale of art works due to the bankruptcy.
Michigan could make its contribution in two ways: spread out
over 20 years or in a single payment. The "lump sum" would
actually be a little under $195 million, which is the net
present value of the pledged amount at a discount rate of 6.75
percent, according to Sara Wurfel, Snyder's press secretary.
"This is one of the key areas - funding source and all
related details - we'll be discussing with the legislature over
the next days and weeks," said Wurfel.
Previously announced settlements over interest-rate swaps
and the treatment of voter-approved unlimited tax general
obligation bonds are included in the latest filing. However,
other matters that have been subject to court-ordered mediation
are not and those include the treatment of limited-tax GO bonds
and the creation of a regional water authority.
(Reporting by Bernie Woodall in Detroit, additional reporting
by Karen Pierog in Chicago and Lisa Lambert in Washington;
editing by James Dalgleish and Matthew Lewis)