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Tuesday, December 03, 2013

Detroit Bankruptcy Judge Rules To Allow Pension (And Bond) Haircuts

As somewhat expected - though hoped against by many Detroit union workers - Judge Steven Rhodes appears to have confirmed Detroit is eligible for bankruptcy protection (after pointing out that the city's accounting was accurate and it is indeed insolvent) making this the largest ever muni bankruptcy.

JUDGE RHODES SAYS HE WILL ALLOW PENSION CUTS IN DETROIT'S BANKRUPTCY

DETROIT JUDGE: NOTHING SEPARATES PENSIONS FROM OTHER DEBT

The city will now begin working toward its next major move - the submission of a plan to re-adjust its more than $18 billion in debt - including significant haircuts for pension funds (possibly 16c on the dollar recovery) and bondholders. With Detroit as precedent, we can only imagine the torrent of other cities in trouble that will be willing to fold.

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2 comments:

  1. lmclainDecember 3, 2013 at 2:11 PM

    EVERY DAY....another city, municipality, or state is threatening pension payments and/or services by waving a possible bankruptcy filing around. Maybe when enough cops are told that the $2800 a month they were promised is REALLY going to be about $380 a month, we'll see some blowback. Politicians are doing what they do best -- travel the world, spend every dime they can find and then some, lying, cheating, and stealing like it's their real job, and funding "projects" for their friends and "benefactors". Then acting surprised (!?) that there isn't any money for the next 25 years. And you keep electing them. Cheer on, baby. Just make sure to turn the thermostat down. That electric bill is gonna be hard to pay now....

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