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Bankruptcy Judge Steven Rhodes asked the city of Detroit to provide more specifics on the terms and planned expenditures of a $120 million loan to improve city services, the Detroit News reported today. Judge Rhodes, in a two-page order released on Monday, ordered the city to turn over the details by Friday of the proposal between the city and London-based investment bank Barclays that’s been opposed by some city creditors. A bankruptcy court hearing on the deal is scheduled for April 2.
http://www.detroitnews.com/article/20140325/METRO01/303250070/Detroit-b…

In related news, the Bankruptcy Judge Steven Rhodes wants to appoint at least one of his own expert witnesses to help him evaluate Detroit’s proposed debt-cutting plan, the Wall Street Journal reported today. The unusual move comes as Judge Rhodes is scheduling hearings to consider the city's road map to restructure an estimated $18 billion in long-term obligations by paying secured creditors in full, paying pension funds a reduced amount and giving other unsecured creditors a smaller fraction of the debt outstanding the city owes. With the savings and additional financing, city officials plan to spend $1.5 billion over 10 years for capital improvements, blight removal and equipment and technology upgrades to make the city safer, cleaner and more efficient. (Subscription required.)
http://online.wsj.com/news/articles/SB100014240527023039497045794617602…

The Detroit Water and Sewerage Department plans to come to market with $150 million of new-money sewer bonds in June, despite questions about the water and sewer system's future amid Detroit's bankruptcy, BondBuyer.com reported yesterday. The Michigan Finance Authority will act as the conduit on the deal and proceeds will finance capital improvements for the year. A restructuring of the system's outstanding $4 billion of debt could also be on the horizon as a consequence of Detroit's chapter 9 proceedings. The borrowing comes at a crucial time for the department, which is the object of heated negotiations between the city and adjacent counties. Detroit emergency manager Kevyn Orr wants to lease the system — one of Detroit's strongest assets — to a new regional authority in exchange for an annual payment. The deal has stalled amid disputes over capital costs, uncollected bills, and other disagreements. (Subscription required.)
http://www.bondbuyer.com/issues/123_57/detroit-will-sell-new-sewer-bond…

In related news, Detroit Emergency Manager Kevyn Orr said that time is running out for creditors to reach an agreement with the city on a plan to resolve the biggest U.S. municipal bankruptcy by reducing $18 billion in debt, Bloomberg News reported yesterday. Creditors know all about the city’s finances and don’t need any more information, Orr said yesterday. He said that in the next couple weeks, he hopes to have enough agreement among creditors to get a debt-adjustment plan enacted by fall. Detroit entered bankruptcy July 18.
http://www.bloomberg.com/news/print/2014-03-24/detroit-s-orr-says-time-…

The city of Detroit is still putting the finishing touches on a bankruptcy debt settlement with two global banks, the Detroit Free Press reported today. A Detroit bankruptcy attorney told Bankruptcy Judge Steven Rhodes that the city is still finalizing documents related to its deal to pay $85 million to eliminate a $288 million “swaps” debt with Bank of America Merrill Lynch and UBS. The settlement is not a done deal until the city and the banks give their final approval and until Judge Rhodes signs off. Judge Rhodes — who has twice rejected previous swaps settlements as too generous for the banks — has set a April 3 hearing to consider approval of the new deal.

Michigan Gov. Rick Snyder said yesterday that getting $350 million in state money to put toward a global settlement of the Detroit bankruptcy case could be “extremely difficult” if state lawmakers haven't taken action by May, the Detroit Free Press reported today. But Snyder also said that he — like many lawmakers — is looking for retirees, unions and the city to reach some kind of preliminary agreement as a first step that would make it easier to get the funding package through the Legislature. Snyder has proposed adding $350 million over 20 years from the state’s tobacco settlement fund to about $465 million pledged by foundations and the Detroit Institute of Arts as part of a so-called “grand bargain” intended to minimize the impact of the bankruptcy on Detroit pensioners, while preventing a sell-off of DIA artwork. Snyder has said that the state money, which must be approved by the Legislature, would be conditional on a final settlement signed off on by retirees and city employee unions.

Detroit asked a federal appeals court yesterday to consolidate seven cases seeking to overturn a December ruling that found the city was eligible for chapter 9 protection, Reuters reported yesterday. In a motion, Detroit asked the Sixth Circuit U.S. Court of Appeals to force the parties, including the city's two pension funds, labor unions and retiree groups, to file in one lead case or to jointly file a principal brief accompanied by short individual briefs. If consolidation of the appeals is not granted, the city asked the appeals court to give it more time to respond to the appeals by pushing the deadline the court set earlier this month to June 17 from May 27.

A bond insurer yesterday struck a blow against Detroit’s proposal to exit bankruptcy, arguing in a new lawsuit that Detroit’s approach would illegally discriminate against the city’s third-biggest group of creditors — the investors who provided $1.4 billion for its workers’ pensions nearly a decade ago, the New York Times reported today. Those investors bought “certificates of participation,” which were the first securities Detroit defaulted on as it prepared to file for bankruptcy last summer. The city now contends that the 2005 borrowing was a “sham transaction” and is proposing to give the investors who bought into it one of the lowest recovery rates in its bankruptcy. The insurer, the Financial Guaranty Insurance Company, said in its lawsuit that Detroit “seeks to turn a crooked eye to history.” It said that the city had benefited greatly from the transaction but was now pretending to be “the innocent victim of fraud perpetrated on a grand scale.”

Kevyn Orr’s hopes of leasing the Detroit Water and Sewerage Department to a regional authority are on life support, as both the city and suburbs are striking much more adversarial stances, The Detroit News reported today. The Detroit emergency manager has sent notices to Wayne, Oakland and Macomb counties that he is ending negotiations on an authority until the three counties are aligned in their positions. Oakland and Macomb oppose the authority as proposed by Orr; Wayne County supports its creation, with reservations. The options that Orr previously spelled out include either selling the city-owned water system or leasing it to a private management firm. Orr’s plan of adjustment for exiting Detroit’s bankruptcy includes creation of the regional authority, which he expects would generate $47 million per year in lease payments to the city.

Lawyers for the city of Detroit and a retiree committee have reached an agreement to protect committee members from potential lawsuits from retirees unhappy with pension cuts, the Detroit Free Press reported today. A lawyer for the nine-member retiree committee last week asked Bankruptcy Judge Steven Rhodes to force Detroit to pay for a $602,000 insurance policy to cover legal costs for committee members if any of the 23,500 retirees sue the members individually. Judge Rhodes had questioned the pricetag which the city must cover because it is responsible for the committee’s expenses, and noted the money might be better spent improving emergency services for the city. Yesterday, retiree committee lawyer Carole Neville announced that an agreement has been reached but said she did not want to reveal terms of the settlement during the hearing. Lawyer Heather Lennox, who represents the city, confirmed there is an agreement which protects the committee. An order with the details will be filed with the court “expeditiously.”

Sandwiched between bankrupt Detroit and two foundering cities that fell under state control, Lincoln Park is trying to avoid the same fate, Bloomberg News reported today. The bungalow suburb of 37,000 residents asked Michigan for a review of its finances, which are so shaky that it diverted $2.5 million to pensions from a water and sewer account. The audit, due by April 11, could prompt Governor Rick Snyder to appoint an emergency manager — a fate the town wants to avoid. Officials in Lincoln Park and other cities are cutting police and firefighters, skimping on services and warily engaging the state as conditions that sent Detroit into insolvency ripple outward. Lincoln Park’s property values fell 46.6 percent since 2007, compared with a 35.2 percent drop across all of Wayne County, which includes Detroit, according to the Southeast Council of State Governments.

Bankruptcy Judge Steven Rhodes set an updated series of deadlines on Thursday for Detroit’s chapter 9, including a July 16 trial date, the Associated Press reported on Friday. The trial previously had been set for June 16, and the new schedule offers more time for all sides to negotiate and resolve disputes before then. The blueprint from state-appointed emergency manager Kevyn Orr for Detroit's restructuring and debt removal calls for the city to spend $1.5 billion over 10 years to remove blighted properties, upgrade public-safety equipment and technology and make other improvements.