The city has millions of dollars in obligations, but a good chunk of those obligations — $388 million worth — is owed to unsecured bondholders. These bondholders were particularly adamant in demanding what they were owed after the city filed, and repeatedly called for appraisals of all the city's assets, including artwork held by the Detroit Institute of Arts.
Today, a settlement deal is on the table for the city of Detroit to pay only $287.5 million to those bondholders, which would subsequently free up funds for administrators to pay its pensioners. Sounds like a win-win situation all-around, right?
Not exactly. Although there is cash set aside for retirees, non-uniformed pensioners still face a 26% cut overall and uniformed pensioners (fire and police retirees) face a 6% cut — and it's believed to be the final offer from emergency manager Kevyn Orr, who does not want to drag on a fight with former employees any longer. Per The Detroit News:
Under Orr's proposed debt-cutting plan, non-uniformed city employees would get a 26 percent pension cut if they agree not to pursue a sale of city-owned art or drag out litigation over a state constitutional protection of their pensions. If they don't, Orr said their pensions could be reduced 34 percent.
Detroit's 4,000 active and 8,000 retired police and firefighters, who have a better-funded pension fund, would get a 6 percent cut if they accept Orr's deal or a 14 percent cut if they continue to fight the proposal in court, according to the plan.
Michigan Gov. Rick Snyder said a recent conference that the city should be all wrapped up with bankruptcy proceedings in October — just in time for the gubernatorial elections the month after.
Photo via AP