Judge Gerald Rosen read the City of Detroit’s historic bankruptcy settlement plan into law today at the Federal Courthouse in downtown Detroit, saying that the city had done a ‘miraculous’ job in satisfying the terms of bankruptcy and settling with all of it’s creditors with the exception of a small group of creditors. Rosen said that the terms of the largest municipal bankruptcy in history had been satisfied and ruled that the City of Detroit had prevailed and met all of the conditions of the bankruptcy plan.
Rosen added that the controversial Grand Bargain plan was the cornerstone of the bankruptcy exit decision. Michigan’s recently re-elected governor, Rick Snyder, signed a set of bills earlier this year, commonly known as the Grand Bargain,which authorized hundreds of millions of dollars in state help for Detroit’s debt repayment.
Rosen added that another key condition of the Chapter 9 bankruptcy was that 816 million dollars would be paid to the city’s pension plan over the next 20 years.
“It’s a vast understatement to say that the city repayment plan is reasonable it is miraculous,said Rosen in his statement to the court approving the pension settlement.
The DIA will also pay art to be held in perpetual charitable trust over the next 20 years until the 120 million dollar settlement is paid. The DIA also prevailed in its bankruptcy argument that the DIA’s art works were not subject to creditor claims. The pressures and dynamics of federal municipal bankruptcy put the famed artworks at risk, in that they could have been a source of debt repayment. Comerica bank also donated 1 million dollars towards the Grand bargain to protect DIA art.
“The July 2013 bankruptcy filing was the city’s only avenue for addressing its fiscal woes, which included a big public pension burden,” said Bruce Bennett, an attorney at law firm Jones Day who presented Detroit’s closing arguments. “About 150 court-ordered mediation sessions helped bridge differences with creditors,” he added.
“This plan is very broadly consensual at this point and the city has settled with all the objectors and all the major economic players in the city of Detroit,” Bennett said.
Judge Rosen also read in a statement to the court that parties had argued that raising taxes is not a viable strategy. He said Mike Duggan said it was a remote possibility that Detroiters would vote to raise taxes and Kevyn Orr said in arguments to the court that the city was at tax saturation and could not withstand any additional tax burden.
“The city has worked honestly, diligently and tirelessly to accomplish exactly what was required in the bankruptcy plan,” concluded Rosen, adding that the City of Detroit and emergency financial manager Kevyn Orr had done a remarkable, extraordinary and brilliant job of devising the bankruptcy plan and acted with extreme integrity in accomplishing the objectives of the bankruptcy plan.