Feb. 24 (Bloomberg) — A Detroit judge set a course for ending the biggest municipal bankruptcy in U.S. history, giving the city and creditors about four months to argue over a plan that seeks to reduce debt at the expense of unions, retirees and bondholders.
U.S. Bankruptcy Judge Steven Rhodes today scheduled a June 16 starting date for a trial where Detroit officials will try to convince him that the plan is feasible and the best way to revitalize the city.
The plan, filed last week, would cut Detroit's record $18 billion debt load and put the city on a path toward exiting court protection by September, when emergency manager Kevyn Orr could be removed from his post by the city council.
Recommended For You
The city, which sought Chapter 9 bankruptcy July 18, offered to pay bondholders about 20 percent on the dollar for their claims and reduce payments on general employees' pensions by about one-third. Police and firefighters would get at least 90 percent of their pensions.
The plan calls for investment in Detroit's aging infrastructure after decades of decline in manufacturing jobs caused it to shrink from the fourth-largest city in the U.S. to 18th. The population, which peaked at 1.85 million in 1950, has dropped to about 700,000, according to U.S. Census data.
Creditor Objections
Unless the city can achieve settlements through confidential mediation sessions, Rhodes will be asked to approve the plan of adjustment over creditor objections.
Creditors will have until March 28 to file any objections to the plan. The judge set aside additional time for the trial on plan approval from June 17 to June 20 and from June 23 to June 27.
City unions have challenged Detroit's right to use bankruptcy to cut pensions, saying it violates state law.
A hearing is set for April 14 to address any unresolved objections to the disclosure statement, which provides an outline of the plan, and to hold an initial status conference on plan confirmation, according to court papers.
The judge will hear objections that raise only legal arguments against the plan at a hearing scheduled for April 28.
The case is In re City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
