Detroit — The city’s bankruptcy judge wants to know Wednesday how much time Detroit’s legal team and holdout creditors need to argue during this month’s trial over the feasibility of Detroit’s debt-cutting plan.
The trial is scheduled for Aug. 21 and was set for five weeks, but U.S. Bankruptcy Judge Steven Rhodes wants to know how much shorter the trial will be following recent settlements between the city and creditors.
Rhodes wants to hear from the city and creditors during a hearing at 9 a.m. in federal court. Rhodes also wants an update on Detroit’s attempt to secure $300 million in financing to help bankroll the city’s restructuring if Detroit successfully emerges from bankruptcy court.
As part of Detroit’s restructuring plan, the city wants to dump about $7 billion in debt in bankruptcy court by slashing pension and health care costs.
Under the plan, past and present city workers would get a base pension cut of 4.5 percent and the elimination of annual cost-of-living increases. Police and firefighter pensioners would see their 2.25 percent annual cost-of-living-adjustment reduced to about 1 percent.
Detroit also wants to recoup up to $239 million from retirees whose optional annuity savings accounts were credited with interest earnings that exceeded the retirement system’s actual returns.
Some 12,000 members of the retirement system face reductions in their monthly pension checks of up to 15.5 percent through the annuity savings fund recoupment, or clawback.
Among other moves, the city wants to cut unfunded pension obligations by 54 percent and health care costs by 89 percent, according to a report by city adviser Kenneth Buckfire.
The cuts would let Detroit reinvest about $1.4 billion in improving city services.