DETROIT (AP) — Detroit's updated bankruptcy plan was filed in federal court on Monday, revealing new details on how the city plans to restructure its debt and provide public services during the largest municipal bankruptcy in U.S. history.
The amended plan of adjustment — considered Detroit's bankruptcy blueprint — and accompanying disclosure statement offer new details on the terms of a settlement with two banks to pay off a bad pension debt deal. The documents also make minor clarifications in how much pension benefits for city retirees would be cut.
"We believe that the plan we have proposed, and continue to refine, is feasible and allows the city to reduce its staggering $18 billion in debt and live within its means," state-appointed emergency manager Kevyn Orr said in a statement. "The plan puts the focus back on providing essential public services to the city's nearly 700,000 residents."
Orr, the attorney who guided Chrysler through its bankruptcy, was appointed by the governor to take over the city's finances last year.
Under the new settlement, Detroit agreed to pay $85 million to settle claims on a pension debt deal with UBS and Bank of America. The two creditors also have said they will support Orr's plan.
The agreement is the city's latest attempt to settle millions of dollars in debt tied to the interest rate swap deal. Detroit had pledged casino tax revenue in 2009 as collateral to avoid defaulting on pension debt payments, which allowed the city to get fixed interest rates on pension bonds with the banks.
The federal judge overseeing the bankruptcy, Judge Steven Rhodes, must still approve the latest settlement. He denied earlier proposals for $220 million and $165 million settlements.
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