DETROIT (Reuters) - A federal judge said on Wednesday that implementation of Detroit’s plan to exit the biggest-ever U.S. municipal bankruptcy should be on the fast track.
“The city needs to begin implementing this plan immediately,” U.S. Bankruptcy Judge Steven Rhodes said at a hearing.
Rhodes waived a 14-day automatic stay on the plan of adjustment, but did not decide the official date for the city’s emergence from bankruptcy. Rhodes said he will conduct a hearing on Nov. 24 on the matter.
Meanwhile, a nine-member commission charged with overseeing Detroit’s post-bankruptcy financial recovery reviewed fiscal deadlines for the city at its initial meeting.
Rhodes on Friday ruled Detroit’s plan for cutting $7 billion of its $18 billion of debt was fair to creditors and feasible for the city to carry out. The next step in the process is issuing a confirmation order that will lead to an effective date for the plan’s many measures and settlements.
The city is eager for the plan to take effect soon so it can obtain an exit loan and set up retiree healthcare associations created as part of a settlement with pensioners. The city’s payments to creditors also begin on the effective date.
One of the biggest issues that has bubbled up in court recently is the more than $140 million in fees that outside lawyers and consultants charged the city during the 16-month bankruptcy process. Rhodes on Wednesday scheduled mediation over the fees for the first week of December.
At its inaugural meeting, Detroit’s Financial Review Commission discussed a timeline in which the city will submit a revised fiscal 2015 budget that complies with the plan of adjustment in the next few weeks.
The commission also has a variety of votes on its schedule that are required by Michigan law.
It must vote on city revenue estimates in February and September, a four-year financial plan from the city by March 23, and a fiscal 2016 budget completed by elected officials by May 24.
On June 1 and again on Dec. 1, the commission will update Michigan Governor Rick Snyder, while every Oct. 1 it will determine whether Detroit is complying with its plan, according to the timeline.
“There will be quite a bit of work between the first and second quarter of next year,” Valerie Brader, the governor’s deputy legal counsel, told the commission.
Reporting by Peter Suciu in Detroit; additional reporting by Serena Marie Daniels in Detroit, Karen Pierog in Chicago and Lisa Lambert in Washington; editing by W Simon and Matthew Lewis