Coming to a town near you
As somewhat expected – though hoped against by many Detroit union workers – Judge Steven Rhodes appears to have confirmed Detroit is eligible for bankruptcy protection (after pointing out that the city’s accounting was accurate and it is indeed insolvent) making this the largest ever muni bankruptcy.
JUDGE RHODES SAYS HE WILL ALLOW PENSION CUTS IN DETROIT’S BANKRUPTCY
DETROIT JUDGE: NOTHING SEPARATES PENSIONS FROM OTHER DEBT
The city will now begin working toward its next major move – the submission of a plan to re-adjust its more than $18 billion in debt – including significant haircuts for pension funds (possibly 16c on the dollar recovery) and bondholders.
DETROIT JUDGE: NOTHING SEPARATES PENSIONS FROM OTHER DEBT this is a big deal
Pensions in Detroit bankruptcy case are not protected from potential cuts, judge says
Judge says evidence ‘establishes overwhelmingly’ that Detroit cannot deliver services and pay its bills, cites police chief’s testimony
Detroit’s big bankruptcy court ruling just happened. Here’s how it went down & what it means:
Detroit pensions can be cut in bankruptcy
U.S. Bankruptcy Judge Steven Rhodes ruled today that Detroit is eligible to file for Chapter 9 bankruptcy protection. That ruling clears the way for the city, the largest ever to declare bankruptcy, to restructure its $18 billion in debt. And, in a move that’s sure to be closely watched by other struggling municipal governments, Rhodes ruled that the city’s public-sector pensions could be reduced as part of that restructuring. Rhodes said in a summary of his ruling that Michigan’s state constitutional protections for pensions “do not apply to the federal bankruptcy court.”
VAPORIZED: Detroit Obliterates Retirement Funds: 80% Cuts to Pensioners: “This Is Going to Affect Everyone”
Though a decade ago civil servants and union members would never have believed it could happen, the stark reality of the situation came to pass this morning.
We now know the answer to the question: What happens when a government makes promises it can’t keep and borrows so much money it can never be repaid?
This morning a judge overseeing the City of Detroit’s fiscal sustainability ruled that the City can be afforded bankruptcy protection, meaning that all 100,000 of its creditors now stand to lose a significant portion of monies owed to them.
The most notable victims are the tens of thousands of retirees living off of pensions – many of whom will see an 80% obliteration of their retirement funds they believed they’d receive until they died.
Creditor attorneys have repeatedly speculated they expect Orr’s plan of adjustment to mirror the June 14 proposal he offered creditors to avoid bankruptcy. That deal proposed giving unsecured creditors such as pensioners and bondholders a $2 billion note for $11.5 billion in estimated debts — or less than 18 cents for every dollar owed.
IT’S LIKE A CHAIN REACTION REACTIVATING…
Gregor Peter ‏@L0gg0l 10 min
Cairo – Athens – Bangkok – Madrid – Kyiv …. – Detroit?
Lesson for Union Dinosaurs: Detroit Bankruptcy Judge Rules Public Pensions Haircuts OK; Unions Whine City Got “Absolutely Everything”
Read more at http://globaleconomicanalysis.blogspot.com/2013/12/detroit-bankruptcy-judge-rules-public.html#pQGMC5t8dsiXMlfC.99
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