Now that Detroit has won the right to enter bankruptcy and even cut the pensions of city retirees, the next step comes when emergency manager Kevyn Orr presents his plan to reorganize the city’s finances and shows how deep those cuts will be, the Detroit Free Press reported today. Known as a “plan of adjustment,” the document is expected within a week or two or at least by early January. It will show in detail where Orr intends to cut and how he intends to raise new revenues for the city. Likely elements of Orr’s plan of adjustment will include what city assets, if any, he intends to sell or otherwise “monetize,” including artwork at the Detroit Institute of Arts and the city’s lucrative water system. Bankruptcy Judge Steven Rhodes cleared a major hurdle for Orr yesterday when he ruled that pension cuts are allowed in a federal bankruptcy case even if those municipal pensions appear to be protected under the Michigan Constitution. But Judge Rhodes also said he won’t approve pension cuts unless Orr’s entire plan of adjustment is equitable.
http://www.freep.com/article/20131203/NEWS01/312030085/
For an analysis by ABI Resident Scholar Prof. Kara Bruce on yesterday’s ruling in Detroit, please click here.