Detroit's bankruptcy plan of adjustment approved, now what? - FOX 35 News Orlando

Detroit's bankruptcy plan of adjustment approved, now what?

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DETROIT (WJBK) - Two major stakeholders in Detroit's bankruptcy are planning to fight until the very end after most Detroit retirees approved the city's plan of adjustment.

"I really appreciate the retirees taking that positive vote because it was hard. They're making sacrifices," says Gov. Rick Snyder.

But thanks to the so-called grand bargain and lots of deal making by emergency manager Kevyn Orr, retirees are not taking nearly as many hits as other creditors, and that could complicate how and when Detroit emerges from bankruptcy

"Think about it. Retirees are getting 95 to 100 percent perhaps on their pensions where as these other creditors are getting 10 cents. Is that fair? That's what the judge is going to have to determine," says Fox 2's legal analyst Charlie Langton.

"There are still challenges and there's still going to be a lot of arguments and litigation and things going on," says Snyder.

If there's a silver bullet for bondholders and other creditors who voted against the plan of adjustment and have a combined seven billion dollars on the line, it's this: "The city helped raise 800 million dollars specifically for retirees. Some retirees are going to get 100 percent on their pension and yet we're only getting 10 cents on the dollar? That's not fair," says Langton.

Even so, it can be argued that those creditors who are owed billions took calculated risks when they invested in Detroit and stood to gain from it.

"Compare that to the retirees, for example, who put 30 years or so of their lives on the line. Those people never thought that they'd get nothing. When you put it in human terms and balance it that way, that'll be the best argument for the retirees and for the judge to approve this plan," says Langton.

And if that's the case, Detroit is within weeks of the original timetable Gov. Snyder predicted when he first declared the city would enter bankruptcy.

"I don't think anyone really thought possible, and again, the hope was it would work as well as it has," Snyder says. "This is something that is truly extraordinary. You have the state coming together with the foundation community with other nonprofits with the DIA and all of us working together to say, 'How do we create an environment to minimize a really difficult environment to retirees?'"

Judge Steven Rhodes will make the final call on the plan of adjustment and will have to decide if stakeholders are in fact getting a raw deal.

A confirmation hearing for the plan of adjustment is set for August 14.
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