Water deal could force another delay in Detroit bankruptcy trial
A federal judge could once again push back the start date for the trial on Detroit’s exit from the largest municipal bankruptcy in U.S. history after some creditors said on Tuesday a possible settlement is snarling key components of the restructuring plan.
The complicated settlement rests on a tender offer for $5.2 billion of the city’s water and sewer revenue bonds.
Since Detroit filed for bankruptcy protection more than a year ago, it has reached a long string of settlements on its $18 billion in debt and obligations.
But coming to an agreement around Detroit Water and Sewerage Department debt had seemed nearly impossible, and in July most of the bondholders voted against the city’s debt adjustment plan.
There is a possibility, though, that not enough bondholders will tender their debt or the offer will not create “sufficient savings,” Heather Lennox, an attorney for the city, said at the hearing.
With the new bonds, the city will seek a court order that water and sewer net revenue pledged as security constitutes a lien on special revenue.
Source: Reuters
