Detroit's bankruptcy trial moving into final phase

DETROIT (WXYZ) - Detroit's bankruptcy case is moving into the final phase, the trial on confirmation of the Plan of Adjustment.

Detroit went into bankruptcy in July of last year to eliminate $18 billion in debt.

What started out as the largest municipal bankruptcy in U.S. history with big protests from city employees and retirees, and the possible sale of city assets, has become largely a consensual settlement process.

Wall Street Creditors remain the ones challenging Detroit's Plan on the grounds that is it not fair and equitable.

Some of those creditors will be paid only 10 cents on the dollar in hundreds of millions of debt.

One of the largest creditors, Syncora Guarantee stands to lose close to a billion dollars and may itself go bankrupt. Syncora and other creditors won't see a dime from the so-called Grand Bargain.

It includes $816 million from the state and foundations to save the collection at the Detroit Institute of Arts from being sold and softens pension cuts to 23,000 Detroit retirees.

Syncora tried to challenge the Grand Bargain and the Federal Mediators who brokered the deal and was shot down by Bankruptcy Judge Steven Rhodes who is considering sanctions against Syncora as the trial starts.

The Judge has hired his own expert who will testify early in the trial if Detroit's plan is feasible and allow the city to provide vital services, public safety, water, street lights, bring city hall up to date and eliminate blight in neighborhoods.

Detroit has secured some post bankruptcy financing. The Water and Sewerage department could be turned into a regional authority. Those talks in closed Mediation have been ongoing for months.

The bankruptcy trial is expected to run through September, maybe longer.

Emergency Manager Kevyn Orr was appointed by Governor Rick Snyder to a term that expires September 27. If bankruptcy is not finished, sources say Orr could stay on as day to day power is returned to the Mayor and City Council.

The trial starts Tuesday morning at 8:30 and is scheduled to run daily as needed. 

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