Detroit files plan to fix debt, leave bankruptcy

The Washington Post
[url]http://www.washingtonpost.com/business/economy/detroit-files-plan-to-fix-debt-leave-bankruptcy/2014/02/21/7a6f2800-9b2c-11e3-975d-107dfef7b668_story.html[/url]

Detroit files plan to fix debt, leave bankruptcy
By Michael A. Fletcher, Published: February 21

Detroit officials Friday laid out a plan for exiting the largest municipal bankruptcy in U.S. history that calls for slashing pensions for non-uniformed retirees by nearly one-third and repaying bondholders just $1 of every $5 owed to them by the city.

The proposed plan of adjustment, filed in federal bankruptcy court in Detroit, puts dollar figures on the potential cuts facing parties owed money by Detroit for the first time since the city filed its $18 billion bankruptcy case in July.

The plan would also cut pensions for police and firefighters, many of whom do not receive Social Security benefits, by 10 percent. City union leaders and retirees reacted to the plan with alarm, saying it would inflict undue pain on current and former city workers who are not responsible for the city’s dire fiscal problems.

“The proposed plan of adjustment is a gut punch to Detroit city workers and retirees,” AFSCME Council 25 President Al Garrett, who represents Detroit municipal workers, said in a statement. “The plan essentially eliminates health care benefits for retirees and drastically cuts earned pension benefits. Retirees cannot survive these huge cuts to the pensions they earned. The plan is unfair and unacceptable.” …. MORE