DETROIT – The plan to put Detroit on a path out of bankruptcy is moving at a faster pace, as a plan of adjustment has been submitted to the city's many creditors.
Local 4 has obtained a copy of the confidential agreement creditors. It is incomplete and lacking in many details. There are empty spaces where dollar amounts need to be filled in.
Options and contingencies are listed, so in the event one plan fails, another outcome will be expected, leaving room for more negotiations.
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To deal with healthcare, the plan would create Detroit VEBA, a voluntary benefits association, like the agreements the UAW reached with General Motors and Chrysler during their bankruptcy negotiations.
A management board would have to be appointed to watch over the money that would be invested to pay the VEBA's claims.
To fund city worker and retiree pensions, the plan counts on a Detroit Institute of Arts settlement, where donated money is used and the DIA's assets would move into what would be called The DIA Corporation, which would be a charitable trust to protect the museum's art collection.
As for the Detroit Department of Water and Sewerage, the plan is to create The Great Lakes Water Authority. Using a 40-year lease, the authority would pay the city $47 million per year under a 20-yaer, renewable contract.
Plunkett Cooney attorney and Local 4 bankruptcy expert Doug Bernstein said the city's creditors are most likely not happy with the plan.
"That's a given. Nobody receives a bankruptcy plan with open arms, unless you already made your argument and made your peace beforehand. It is not a document you love to see," Bernstein said.
Federal Bankruptcy Court Judge Steven Rhodes set a March 1 deadline for the submission of the Recovery Plan.
The city and its creditors must now work to fill in the blanks with the money amounts and submit the plan to Judge Rhodes.
He has strongly urged all involved to give him a plan that is feasible. If it is not, he could reject it and start the Chapter 9 bankruptcy process all over again.