Chief Judge Gerald Rosen of U.S. District Court for Eastern Michigan oversaw the biggest settlements in Detroit’s bankruptcy case: an $816 million deal to bolster public-worker pensions in return for protecting city-owned art from liquidation; Detroit’s agreement to pay $85 million to end interest rate swaps valued at $288 million; the Syncora accord; and a similar deal that will pay another bond insurer a fraction of the $1.1 billion it claimed to be owed, Bloomberg News reported today. Rosen’s impact on the case has been almost as great as that of Steven Rhodes, the U.S. bankruptcy judge who’s set to announce tomorrow whether he’ll approve Detroit’s plan, said Erik Gordon, a professor at the University of Michigan’s Ross School of Business. Under the city’s plan, Detroit will eliminate more than $7 billion of about $10 billion in unsecured liabilities, including an underfunded pension, $1.4 billion in pension-related debt owed to hedge funds and bond insurers, and future health-care costs for retired city workers. The deal to shore up Detroit’s pension system is the most significant in the case. It resolved a $3.5 billion hole in two pension funds that cover about 30,000 retired and active city employees, including police and firefighters. Rosen helped persuade some of the biggest philanthropic foundations in the U.S. to contribute more than $300 million to the pension systems in exchange for a guarantee that the city-owned Detroit Institute of Arts, which houses a collection worth billions of dollars, wouldn’t be used to help pay creditors.
