February 24, 2014 at 7:33 pm

Judge sets June trial date for Detroit bankruptcy plan

Under Detroit's proposed plan, non-uniform city employees would get a 26 percent reduction in their pensions if they agree not to pursue a sale of city-owned art or drag out litigation over state constitutional protection of their pensions. (Brandy Baker / The Detroit News)

Detroit — The city’s bankruptcy judge on Monday set a June 16 trial date for Detroit to prove it can accomplish a plan to shed debt and end the biggest municipal bankruptcy case in U.S. history.

The scheduling order from U.S. Bankruptcy Judge Steven Rhodes comes three days after Detroit filed a plan to slash half its $18 billion in debt and upgrade aging infrastructure in a bid to turn around the Motor City’s decades-long decline.

Rhodes set aside 10 days for the trial, which would leave the city about three months to exit bankruptcy before the end of Emergency Manager Kevyn Orr’s appointment.

In doing so, Rhodes urged the city and creditors to strike deals that could speed the city’s bankruptcy case. There are ongoing negotiations headed by Chief U.S. District Judge Gerald Rosen and a team of mediators.

“Nothing herein excuses any party from the continuing obligation to participate in good faith in any mediation as ordered by Chief Judge Rosen,” Rhodes wrote. “Further, the court again strongly encourages all parties to negotiate with full intensity and vigor with a view toward resolving their disputes regarding the treatment of claims in the city’s plan of adjustment.”

Also Monday, Rhodes set an April 28 hearing for creditors who have legal objections to parts of the debt-cutting plan. He also set a 2 p.m. hearing for Tuesday to consider expediting approval of the city’s disclosure statement, a 440-page road map for the city to exit bankruptcy.

Under the proposed plan, non-uniform city employees would get a 26 percent reduction in their pensions if they agree not to pursue a sale of city-owned art or drag out litigation over state constitutional protection of their pensions.

If they don’t accept a “timely settlement” within the next month, Orr said they could see their pensions reduced 34 percent.

Detroit’s 4,000 active and 8,000 retired police and firefighters, who have a better-funded pension fund, would get a 4 percent cut if they accept Orr’s deal or a 10 percent cut if they continue to fight the proposal in court, according to the plan.

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