Detroit EM’s Plan May Hike Bond Costs in MichiganJuly 17, 2013 – In The News
Michael Sweet was quoted in the Detroit News article "Detroit EM’s Plan May Hike Bond Costs in Michigan." While the full text can be found in the July 17, 2013, issue of Detroit News, a synopsis is noted below.
Municipal leaders in Michigan are growing increasingly alarmed at Kevyn Orr’s plan to pay some municipal bondholders 10 cents on the dollar, a move that Wall Street bankers say could drive up borrowing costs in Michigan.
Michael Sweet says that if the city seeks bankruptcy protection, the issue of whether general obligation bonds must be paid in full is likely to be litigated. Sweet noted that while only Orr can propose a debt settlement plan, the judge can reject it or demand changes before it will be approved, which leads to the possibility that bondholders will argue to the judge that the city must sell some artwork from the Detroit Institute of Arts or some cars from the city’s collection.
“The judge can’t force the city to sell the fancy cars and that museum exhibit,” Sweet said. “The judge could say: ‘I’m not going to approve a plan unless you sell those cars.’”