Detroit Emergency Manager Kevyn Orr meets with creditors today, pension representatives to attend
5:51 PM, Jun 13, 2013
10:30 AM, Jun 14, 2013
DETROIT (WXYZ) - Detroit Emergency Manager Kevyn Orr is meeting with creditors today at the Westin Hotel at Detroit Metro Airport.
Representatives of both pension systems are among the 150 creditors meeting with him right now.
7 Action News is there to bring you the latest. Information from the meeting will be released after 11:45 a.m.
Orr could take over control of both city employee pension funds if financial reports show their level of funding is 80% or less.
The police and fire pension board and the general retirement board control $5 billion dollars in funds for 30,000 active and retired Detroit City employees.
There is a catch 22 as both boards have accepted IOUs from the city over the years to prevent the city from running out of cash.
The boards are made up of elected city employees, and appointees by the mayor and city council. The Emergency Manager in his report in May said that amount is $600 million.
The latest report shows the general retirement fund is at the critical number of 80% while the police and fire fund is at 96%.
"This is what we think needs to be done in order for the city to have the opportunity to reinvest, to address its legacy debt obligations," said Orr, "In a sense, once we give them the truth, the unvarnished truth, and say this is what we plan to do, their response and their ability to make concessions will really determine what we do next."
Bankruptcy attorney Doug Bernstein believes Chapter 9 municipal bankruptcy seems inevitable, given the massive wave of potential concessions.
"If the city can't afford the debt, whether it's pension debt, money that they owe to you or to me, it's all the same." said Bernstein, "They can't afford it. And they've got to get it to a manageable level."