The Craig Fahle Show

Bankruptcy Update: Plan of Adjustment Voting Results

Tuesday, July 22, 2014

Bankruptcy reporter and Next Chapter Detroit blogger Sandra Svoboda speaks with Detroit Free Press reporter Matt Helms about the results of the Plan of Adjustment voting by creditors and pensioners.

Sandra and Helms recap the results of the votes, which came out late last night. Detroit retirees voted to accept the pension cuts, and with “yes” votes from the majority of both classes of pensioners, the city is one step closer to solidifying a potential restructuring plan.

However, not everyone is in favor of the “grand bargain.” Financial creditors, namely New York-based bond insurer Syncora , had the most emphatic vote with a unanimous no. “We expect them to fight to the death,” says Helms. Syncora is calling for a six-week delay, and Helms says “you could see one of the city attorneys was pretty exasperated,” by that request.

As far as opposition within the two classes of Detroit pensioners goes, more than 600 individual pensioners filed objections to the city’s plan. The Detroit Fire Fighters Association has been the most adamant in their opposition, as “they think pensioners are being treated unfairly,” says Helms. The DFFA announced today they are continuing with their appeal.

Helms also talks with Sandra about a new report from expert witness Martha Kopacz, who was hired by Bankruptcy Judge Steven Rhodes, to independently evaluate the plan and offer an analysis. The report, which is more than 200 pages, is an assessment of the feasibility of the Plan of Adjustment, and is expected to influence the outcome of the confirmation hearings beginning Aug. 14.

“Among the factors he has to consider is whether it’s fair to creditors, meets legal requirements and whether or not the long term plan is feasible,” Helms says about Judge Rhodes, who will preside over the hearings.

The tech skills of the city’s workforce are also a point of concern in Kopacz’s report. “She said the city’s workforce is low skilled and it’s something the city is going to have to address, and one of the biggest expenses is going to be training,” says Helms.

However, even with these points of contention, Kopacz did determine that the plan was feasible. A decision on Syncora’s request for a six-week delay is expected to come out in the next few days, and Detroit’s Chapter 9 will proceed in the coming weeks, when the confirmation hearings begin.

Find more coverage of Detroit's bankruptcy and its impact on people and neighborhoods on WDET's Next Chapter Detroit blog.

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