Where Does Detroit’s Bankruptcy Go from Here? Here’s a Road Map To How it May Play OutJanuary 1, 2014 – In The News
Michael Sweet was quoted in the Detroit Free Press article "Where Does Detroit’s Bankruptcy Go from Here? Here’s a Road Map To How it May Play Out." While the full text can be found in the January 1, 2014, issue of the Detroit Free Press, a synopsis is noted below.
For Detroit, the biggest question that lies ahead in 2014 is whether the city can reach an agreement with its creditors to exit Chapter 9 bankruptcy.
Kevyn Orr, the city’s emergency manager, is expected to file his first reorganization plan this month. If he can gain support from some creditors for the plan, it could signal a deal is within reach.
There is growing pressure for creditors to strike a deal, particularly pensioners, who a judge ruled are subject to cuts, said Michael Sweet.
“No matter when in the process you agree to a settlement, you always run the risk that if you don’t settle, you could get stuck with a worse deal,” said Sweet.
Orr’s goal is for the city to exit bankruptcy by September, and it is still possible that could happen.
“It’s a very aggressive schedule, but so far the emergency manager and the judge have shown a willingness to move quickly and an ability to move quickly,” Sweet said. “I still think it’s going to take a lot of work, but every indication I’ve seen shows the parties involved are willing to work hard to do that.”
“Judge Rhodes went further than he needed to in the ruling on eligibility by sending a message that folks ought to be looking for a compromise on the pensions,” Sweet said. “By listening to what he said, the pension funds have a good indication of where he’s likely to go on a plan. So they have two choices: They can either accept that and try to work within that framework to get to a compromise, or they can fight.”
This story was also featured in USA Today.