DETROIT (AP) — The state-appointed emergency manager
overseeing Detroit’s finances on Wednesday gave the bankrupt city’s
creditors copies of his plan to restructure the debt, though it could be
modified before being reviewed by a court.
Details of the plan
were not released publicly. In a written statement to the media, Orr
said the so-called plan of adjustment outlines how much each class of
creditors would receive for claims submitted in bankruptcy court.
The plan is expected to be filed with the court in about two weeks, Orr said.
He
said the plan "offers the most effective and efficient way for Detroit
to resolve its numerous issues." He originally had said the plan would
be released in late December but moved that back as mediation continued
with city unions, banks, a group representing retirees, and other
creditors.
"There is much work still to do and we believe the
proposed plan provides the roadmap for all parties to resolve all
outstanding issues and facilitate the city’s efforts to achieve
long-term financial health," said Orr, who was appointed by the state
last March to fix Detroit’s finances.
He filed the bankruptcy
petition in July. Bankruptcy Judge Steven Rhodes approved it in
December. It’s the largest municipal bankruptcy in U.S. history.
Experts
have said the debt-restructuring plan likely will bear some
similarities to a June 14 report laid out to creditors when Orr said
Detroit was insolvent. He placed Detroit’s debt at $18 billion or more,
including $3.5 billion in unfunded pension liabilities and $5.7 billion
in unfunded retiree health care obligations.
"Time is of the
essence," Orr said Wednesday. "The longer we remain entrenched in our
positions and fail to reach an agreement, the worse life gets for
Detroit’s 700,000 residents and the greater our collective challenges
become. My team and I believe this plan presents each interested party
with fair and equitable treatment, and we look forward to working with
our creditors to adopt this plan."
Since filing for bankruptcy,
Orr has proposed freezing pension benefits to thousands of city workers
and reducing health care benefits, affecting about 28,500 current and
retired employees.
Those actions were part of Orr’s preview to his
plan of adjustment, said Michael Sweet, a bankruptcy attorney in
Fox-Rothschild’s San Francisco office.
"He’s trying to get it out there in a way to make it digestible to people," Sweet told The
Associated Press earlier this month.
Another
part of Orr’s plan likely will include the future of city-owned pieces
in the Detroit Institute of Arts. An appraisal by New York auction house
Christie’s determined that city-owned pieces in the museum have an
estimated value roughly between $450 million and $870 million.
To
keep the art from potential sale, a coalition of foundations and
individuals has pledged $370 million to go toward pension benefits for
retirees. Gov. Rick Snyder separately is trying to win approval for $350
million from the state. And mediators in bankruptcy court said
Wednesday that the art museum plans to announce a $100 million
fundraising effort.
All of that "likely means less of a hit to
pensioners and the opportunity to keep important cultural assets within
the community," Sweet said Wednesday. "But it remains to be seen what
the impact of these deals will be on the outcome of the city’s
bankruptcy."
The Police and Fire Retirement System received the
plan about 3 p.m. Wednesday, said Bruce Babiarz, a spokesman for the
pension system.
"The preliminary plan of adjustment is just that —
a preliminary document that has been distributed to creditors," said
Babiarz, who would not discuss its contents due to the ongoing,
confidential mediation sessions with the city.
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