Detroit could get a ticket to get out of bankruptcy next Friday.
U.S. Bankruptcy Judge Steven Rhodes will reveal his decision on whether the city’s bankruptcy-exit plan, which cuts $7 billion in debt, is fair.
City leaders and creditors picked through the details of the plan during a trial that lasted several weeks. The plan calls for $275 million in new borrowing and a $1.7 billion reinvestment in removing blighted buildings and boosting police and fire services in the city.
With Judge Rhodes’s approval, city leaders say Detroit could be out of bankruptcy court as soon as Thanksgiving, bringing to close the largest municipal bankruptcy in U.S. history. The 680,000-resident city filed for bankruptcy on July 18, 2013, to try to negotiate cuts to $18 billion in debt, blaming tax revenue that fell after the real-estate crash and the city’s population decline.
Throughout the case, Detroit leaders fought pressure from some Wall Street creditors and others to sell the city’s valuable art collection to repay a greater portion of the city’s debt. Federal mediators helped negotiate a deal to use more than $800 million from private foundations and the state of Michigan to avoid that sale and make the cuts to city’s worker pensions less severe.
Some individual objectors are still challenging the reorganization plan, arguing in part that the city’s emergency manager acted improperly in cutting any benefits to pensioners.