The messy Detroit Chapter 9 municipal bankruptcy case looks like it will be resolved at a rapid pace. Judge Steven Rhodes has set a potential bankruptcy plan confirmation hearing in the case for July to the chagrin of several creditors trying to slow the proceedings down. Creditors and two of the three largest US credit ratings agencies criticized the early city reorganization plan for putting considerations of public workers and retirees before those of creditors, especially bondholders. Moody’s Investors Service predicted a particularly high potential for a “cram-down” on creditors.
Detroit stands as the largest municipal bankruptcy case in US history and is under close watch nationally because of its potential implications for many US cities struggling with escalating debt problems tied primarily to retiree benefits such as pensions and health insurance.
- Brian Shappell, CBA, CICP, NACM staff writer
