Detroit dropped a key requirement in its latest version of an agreement on costly interest rate swaps with two investment banks, Reuters reported yesterday. Under the agreement, UBS AG and Merrill Lynch Capital Services, a unit of Bank of America Corp. would no longer have to support the financially hobbled city's plan to restructure its debts. Other creditors had said that they could be subject to a "cram down" if the banks officially approved the plan. Under chapter 9, once a city wins agreement from a single class of creditors whose interests are impaired by bankruptcy it can then impose settlement terms on other classes of creditors. In the agreement, though, the banks state they will not object to a debt-adjustment plan. On Monday, Detroit will submit to the bankruptcy court an amended adjustment plan, along with a revised disclosure statement that responds to various "informal requests for the inclusion of additional information," the city said in a filing yesterday. Bankruptcy Court Judge Steven Rhodes has scheduled a hearing for April 4 on the plan and its treatment of retirees.
