Historic bankruptcy trial starting in Detroit
Published 9:34 am Tuesday, September 2, 2014
DETROIT — Lawyers for Detroit will attempt to convince a federal judge at the city’s bankruptcy trial that its plans to wipe out billions of dollars in debt should be approved.
After some delays, the start of the trial Tuesday in U.S. District Court comes just over 13 months after Detroit became the largest U.S. city to file for bankruptcy.
Detroit expects to cut $12 billion in unsecured debt to about $5 billion, which is “more manageable,” according to Bill Nowling, a spokesman for emergency manager Kevyn Orr.
Most creditors, including more than 30,000 retirees and city employees, have endorsed the plan of adjustment put together by Orr and his restructuring team.
The plan includes commitments from the state, major corporations, foundations and others to donate more than $800 million over 20 years to soften cuts to city pensions. In return, pieces in the city-owned Detroit Institute of Arts would be placed into a trust to keep them from being sold to satisfy creditors.