Monday, May 28, 2018
News Roundup

Detroit draws map to get out of bankruptcy

DETROIT — Detroit presented its first full road map for leaving bankruptcy Friday, outlining an elaborate plan to restructure $18 billion in debt, demolish thousands of blighted homes and invest in the broken-down infrastructure that has made the city a symbol of urban decay.

If approved by a judge, the wide-ranging proposal would sharply cut payments to some retirees and creditors. Pension holders could expect to get 70 percent to 90 percent of what they are owed; many banks would receive as little as 20 percent.

The plan, which is sure to be the subject of court challenges, envisions a leaner, cleaner and safer Motor City after its crushing financial burdens are lifted.

"There is still much work in front of all of us to continue the recovery from a decadeslong downward spiral," Kevyn Orr, the city's state-appointed emergency manager, said in a statement.

Gov. Rick Snyder called the plan "a critical step forward." But it leaves unanswered many questions, including whether creditors and labor unions will accept the deal or fight it, and how long that process might take.

Orr has said he would like the city to emerge from the nation's largest municipal bankruptcy by the fall, when his term is up.

Bankruptcy attorney and St. John's University law professor Anthony Sabino said the plan could spark an argument between city workers and retirees and police and firefighters.

The package calls for awarding police and fire retirees at least 90 percent of their pensions after eliminating cost-of-living allowances. Other retirees would receive at least 70 percent.

Orr "wants to have the firefighters and police have 90 percent and other city workers cut back to two-thirds," Sabino said Friday. "The other unions will say, 'Even if we're uneven, we should be closer.' It does create an inequity that is going to have to be addressed in court."

The city wants to spend $500 million to knock down up to 450 decaying, abandoned properties each week. Those buildings are Detroit's most visible eyesores and magnets for criminal activity.

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