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  #531  
Old 06-25-2014, 08:25 AM
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http://m.freep.com/detroitfinancialc...6200107&f=4268

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With a deadline looming for retirees and other creditors to vote on Detroit's bankruptcy exit strategy, a bevy of state and local officials on Friday urged retirees to think carefully about how they vote on a central piece of that plan: a grand bargain aimed at easing pension cuts and sparing the Detroit Institute of Arts from sales of its masterworks.

Gov. Rick Snyder officially approved the state's portion of the grand bargain Friday, signing into law a package of bills provides the state's share -- $195 million -- of the $816-million deal in which ownership of the city-owned museum would be transferred to a nonprofit trust, with proceeds going to ease deep pension cuts. The bills also provide long-term state oversight of the city after it emerges from the nation's largest-ever municipal bankruptcy.

"This is a story that's not over," Snyder said at a news conference celebrating bipartisan support in the Legislature for a deal that many never imagined would come. "So while we celebrate today, let's recognize there's more work to be done."
......
Speakers at the bill signing Friday, which was held at the state Department of Natural Resources' Michigan Outdoor Adventure Center in the renovated manufacturing center called the Globe Building off East Jefferson in Detroit, noted that there's still a large number of retirees who oppose the deal and want to reserve their right to fight any cuts.

A significant contingent of retirees still says the cuts are too steep. Under the city's terms, pensions would be cut 4.5% for General Retirement System retirees, who would also lose cost-of-living adjustments. Pensioners in the Police and Fire Retirement System would see no pension cut but would see COLA cut in half, to 1%. Retiree rejection of the deal would mean GRS pension cuts of 27% or more and would wipe out COLA altogether for the PFRS.

Nelson also noted that the cuts go steeper because the city is seeking repayment of excess interest payments made to workers who invested their pay into annuity savings funds separate from their pensions. The city said the GRS paid out too much interest in years when the fund wasn't making money, and Detroit needs to recoup some of it; total GRS cuts are now capped at 4.5% plus 15.5% in the annuity savings repayment.

Retirees opposed to the deal say that those cuts, coupled with health care benefit reductions of up to 90%, will be too much to bear for pensioners with modest monthly checks.
......
Breakdown of grand bargain legislation

HB 5566: Creates a nine-member oversight commission (seven state, two city appointees), which will have authority over the city's finances, budgets and contracts for at least three years. Will go dormant if city attains certain benchmarks like balanced budgets, access to financial markets, no borrowing to pay bills for three years in a row. If those benchmarks are met for 10 more years, the commission is dissolved.

HB 5567: Requires city to hire a chief financial officer and spells out the qualifications and duties.

HB 5568: Limits contributions to pension plans to 7% of base pay of employees and no more than 2% of base pay for retiree health care.

HB 5569: Prohibits the city from exempting itself from a state mandate requiring no better than an 80-20 split between employer and employees on health care.

HB 5570: Establishes an investment committee to oversee the city's two pension boards.

HB 5573: Requires an annual payment of $17.5 million for 20 years from the state's tobacco settlement money into the rainy day fund.

HB 5574: Transfers $194.8 million from the state's rainy day fund into a special fund for the city. The current balance of the rainy day fund is $580 million.

HB 5575: Creates the Michigan Settlement Authority, which will transfer the money to the city.

HB 5576: Amended to say that the oversight commission will not having authority over binding arbitration decisions in police and fire disputes.
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  #532  
Old 07-09-2014, 03:04 PM
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http://www.freep.com/article/2014070...ement-contract

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The City of Detroit reached a tentative contract with its largest police union late Tuesday, potentially resolving one of the city’s last remaining labor disputes as it nears a potential exit from Chapter 9 bankruptcy.

The tentative deal — reached in confidential mediation talks — came three days before votes are due on the city’s bankruptcy restructuring blueprint, called a “plan of adjustment.”

The Detroit Police Officers Union has agreed to recommend a “yes” vote on the plan after reaching a multiyear deal on wages, pensions and health care benefits, lead bankruptcy mediator Gerald Rosen said in a statement. The union and the city agreed to continue negotiations to try to reach a five-year deal.

.....
Other labor groups, including AFSCME Council 25, the city’s largest public union, have reached deals with Detroit in advance of a bankruptcy trial scheduled to start Aug. 14 on whether to approve the city’s restructuring plan.

Reaching a deal with the city before the trial helps assure union workers’ contract terms are negotiated rather than imposed later on.

Terms of the tentative contract were not immediately available, but it also included an agreement on “retention payments,” Rosen said.

“With this agreement, only a few remaining, albeit significant, disputes remain to be addressed between the City and its creditors,” Rosen said.

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  #533  
Old 07-13-2014, 01:14 PM
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http://m.freep.com/detroitfinancialc...7110188&f=4268

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Several major hedge funds have acquired a portion of Detroit's bad debt in an apparent attempt to turn a quick profit on the city's Chapter 9 bankruptcy.

The hedge funds, which specialize in making money off distressed debt, today revealed their moves by filing official objections to the city's restructuring plan.

But their emergence -- which was long expected -- may yet prove to be a positive development because they are often inclined toward settlements.

In other words, the arrival of hedge funds -- which critics often refer to as vulture investors -- may help resolve the largest municipal bankruptcy in U.S. history. For now, though, they are officially objecting to Detroit emergency manager Kevyn Orr's plan of adjustment.

The hedge funds that revealed themselves as creditors in Detroit's bankruptcy include Panning Capital Management, Monarch Alternative Capital, Aurelius Capital Management and Stone Lion Capital Partners.

It was not immediately clear how much debt the hedge funds had acquired, at what price or when. They may be targeting the $1.4 billion in pension obligation certificates of participation issued in 2005 by Mayor Kwame Kilpatrick's administration to fund Detroit pensions.

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  #534  
Old 07-22-2014, 08:31 AM
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Workers and retirees approved pension cuts in Detroit’s bankruptcy by a landslide, the city reported Monday, a crucial step to emerging from the largest municipal insolvency in U.S. history.

The city disclosed results from two months of balloting, which ended July 11. Judge Steven Rhodes still must hold a trial in August to determine if Detroit’s overall bankruptcy plan is fair and feasible to all creditors, from Wall Street to Main Street, but support from retirees is vital.

snip ...

General retirees would get a 4.5 per cent pension cut and lose annual inflation adjustments. They accepted the changes with 73 per cent of ballots in favour. Retired police officers and firefighters would lose only a portion of their annual cost-of-living raise. Eighty-two per cent in that class voted “yes.”

The counting was done by a private company.

Approval of the pension changes triggers an extraordinary $816 million bailout from the state of Michigan, foundations and the Detroit Institute of Arts. The money would prevent the sale of city-owned art and avoid deeper pension cuts. The judge, however, still must agree.

snip ...

The Michigan Constitution says public pensions can’t be cut, but Rhodes, in his most significant decision in the case, said in December that federal bankruptcy law trumps that shield. It was a groundbreaking opinion that could influence local governments across the country that go broke.

Michigan Attorney General Bill Schuette believes Rhodes is wrong, but he said Monday he won’t appeal now that retirees have voted for the cuts.

“I will respect their decision,” he in a statement after the approval was announced.

Separately on Monday, a Boston-based restructuring expert hired to advise the judge said Detroit’s overall bankruptcy plan is “feasible,” a key standard at the upcoming trial. But Marti Kopacz warned that antiquated computer systems, a pledge to spend more than $1 billion to improve services after bankruptcy and a “cultural malady” among workers all will be challenges.

“There are ... employees who don’t grasp that their job is to provide a service to the taxpayers versus the taxpayers owing them a job,” Kopacz said in a report.
emphasis added

http://www.theglobeandmail.com/news/...ticle19704513/
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  #535  
Old 07-22-2014, 02:07 PM
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http://www.freep.com/article/2014072...d-bargain-vote

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Still, several obstacles linger for the bankruptcy. For one thing, 119 classes of Detroit Water and Sewer Department secured bondholders voted “no,” compared to 32 that voted “yes,” presenting a legal hurdle for the city. They voted “no,” even though they will be paid 100% of their principal, because they are mad at the city’s plan to redeem their bonds early.

The city is expected to continue negotiations with the water and sewer investors in a bid to reach a settlement that could resolve their differences.

Four groups of unsecured creditors voted “no” — including the stiffest of opponents, a group of bond insurers and hedge funds that control $1.4 billion in pension debt issued by Mayor Kwame Kilpatrick’s administration in 2005.

“I don’t think anyone’s surprised by this,” U-M’s Pottow said. “Everyone knew the bonds were going to vote no. The big battle we’re going to have looming is going to be the bondholders. They’re going to say you can’t pay these pensions better than us.”

Smaller unsecured creditors, including people who sued the city and are owed settlements, also voted “no.”

The Chapter 9 bankruptcy will now proceed to its final stage: a massive confirmation trial starting Aug. 14 to decide whether the plan is fair, legal and feasible.

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  #536  
Old 07-24-2014, 06:19 PM
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not so fast....

http://www.csmonitor.com/Business/La...-bond-insurers

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DETROIT — Companies that insure Detroit bonds and stand to lose millions repeated a pledge Tuesday to aggressively challenge the city's bankruptcy plan, a day after retirees endorsed pension cuts and qualified for a bailout led by the state.

Syncora and Financial Guaranty Insurance said retirees and city workers are being given special treatment that's unfair to other creditors.

.....
General retirees would get a 4.5 percent pension cut and lose annual inflation adjustments. Some also have to repay a portion of generous annuity earnings from the last decade. Retired police officers and firefighters would lose only a portion of their annual cost-of-living raise.

The city said the cuts would be worse without $816 million in aid from the state of Michigan, foundations and the Detroit Institute of Arts. Money from the so-called grand bargain would prevent the sale of city-owned art and avoid deeper pension reductions.

No other creditors qualify for the money. Judge Steven Rhodes still would need to bless the deal after a trial on Detroit's overall bankruptcy plan, which starts Aug. 14.

"We are not surprised at the vote, given the grand bargain's illegal diversion of highly valuable assets to the very creditors who voted yes," James Sprayregen, an attorney for Syncora, said Tuesday. "We look forward to the confirmation hearing and demonstrating to the court that the plan cannot legally be confirmed given its unfair discrimination against financial creditors and other serious infirmities."

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  #537  
Old 07-27-2014, 05:18 PM
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http://www.detroitnews.com/article/2...subpoena-power

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Detroit could be under prolonged and apparently unprecedented court oversight if the city successfully emerges from bankruptcy court this fall, according to a plan proposed Friday.

In response to concerns raised by U.S. Bankruptcy Judge Steven Rhodes, the city’s legal team proposed he appoint a monitor to oversee compliance with Emergency Manager Kevyn Orr’s plan to shed more than $7 billion in debt.

The so-called “plan monitor” would file quarterly reports with the court and have power to subpoena records and answers from the mayor, City Council, pension fund trustees and officials overseeing health-care trusts.

The “plan monitor” details are included in a revised version of the city’s debt-cutting plan filed Friday in bankruptcy court.

The post-bankruptcy monitoring proposal was included in the revised plan to give Rhodes an option for long-term oversight, but Detroit’s bankruptcy legal team is open to other ideas, Orr spokesman Bill Nowling said.

“What form any of it takes is up to the judge,” Nowling said Friday.

Attorney James Spiotto, a municipal bankruptcy expert in Chicago, said it would be unprecedented in the nation’s handful of Chapter 9 cases to have the city remain under the court’s oversight for years to come.



From The Detroit News: http://www.detroitnews.com/article/2...#ixzz38haecNEN
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  #538  
Old 07-27-2014, 06:56 PM
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It appears that the majority of the posters here don't believe that the pension cuts are close to enough so what happens when the stuff hits the fan in a few years?
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  #539  
Old 07-27-2014, 07:48 PM
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I really have no idea.

Evidently, some of the issue were those 13th checks (holy crap), and then there's that pension participation certificates or whatever they're called (serious evil)... I really have no idea what the situation is like.

In my opinion, Illinois pensions sink first.
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Old 07-30-2014, 04:37 PM
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http://www.detroitnews.com/article/2...O01/307290075/

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A federal appeals court judge late Tuesday challenged creditors to decide within 48 hours if they’ll continue to contest Detroit’s eligibility for bankruptcy and its plan to cut pensions.

The judge’s letter came after four creditor groups on Tuesday postponed Wednesday’s planned appeal over aspects of the city’s July 2013 Chapter 9 filing. Judge Julia Smith Gibbons, heading a three-judge panel that was to hear the arguments, wrote that she was pleased that settlement negotiations were progressing, but that time was running out.

“The panel does not consider further delay in rendering a decision an option at this time,” Gibbons wrote. She explained that the judges need time to rule before a federal bankruptcy judge decides on the fairness of Detroit’s exit plan. She gave creditors until the close of business Thursday to decide whether they would drop their challenges to U.S. Bankruptcy Judge Steven Rhodes’ prior rulings in the city’s favor.

While the postponement was one sign Tuesday of apparent progress toward a negotiated settlement, one legal challenge in the nation’s largest municipal bankruptcy will proceed Wednesday.

Detroit’s fiercest creditor will appear before the 6th Circuit Court of Appeals in Cincinnati to argue that the city should not have access to a coveted $15 million pot of monthly casino taxes.

Attorneys for Syncora Guarantee Inc. will make their case over an issue the bond insurer has been fighting since even before the city took legal shelter in bankruptcy court.

At issue is whether Detroit should have unfettered access to its casino taxes — the bankrupt city’s most reliable revenue source — after the city defaulted on debt backed by gambling tax receipts.

Syncora is one of two companies that insured the underlining debt former Mayor Kwame Kilpatrick’s administration used to prop up the city’s pension funds. The financial giant has argued the casino tax revenues should be used to make payments on the $1.4 billion in pension debt so the company doesn’t have to pay insurance claims.

The three-judge appellate panel will hear Syncora’s appeal just three weeks before Detroit’s bankruptcy exit plan is set to go on trial. The hearing is scheduled for 1:30 p.m. today



From The Detroit News: http://www.detroitnews.com/article/2...#ixzz38yy0ANir
I watched a webinar on the Detroit bankruptcy this morning from S&P. I thought it was very interesting - they went over the proposed recovery rates of different issues, outstanding items to be decided by the court, etc.
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