DETROIT (WXYZ) - Detroit has reached a mediated settlement over Unlimited Tax Obligation Bonds that settles $388 million in the city's $18 billion debt.
Those bond holders will get 74 cents on the dollar while the other 26% of that obligation, or close to $100 million, will be designated for a stabilization fund to keep some Detroit City retirees from falling below the Federal Poverty line. That number of retirees is not known.
Detroit has 23,000 retirees facing pension cuts ranging between 6% and 34% in bankruptcy and will vote whether to accept Detroit's Plan of Adjustment when ballots go to them next month.
Those retirees also would not have cost of living increases in their pensions and also have been hit with significant health care cuts.
This settlement moves the city another step closer to a possible cram down if retirees and other creditors vote no on the city's plan.
However, those retirees and creditors can still make a case in bankruptcy court this summer that their proposed cuts are not fair.
A court hearing on another settlement with Wall Street banks over loans tied to Detroit casino revenue is set for Friday.
Detroit Emergency Manager Kevyn Orr hopes to move Detroit out of bankruptcy in October. His term as Emergency Manager is set to expire in September.