DETROIT — The City of Detroit has reached five-year collective bargaining agreements with two of its police unions, according to restructuring documents filed Monday in U.S. Bankruptcy Court.
The city said the Detroit Police Lieutenants and Sergeants Association and the Detroit Police Command Officers Association agreed to five-year contracts involving wages, pensions and health-care benefits.
The deals were revealed in the latest version of the city’s bankruptcy restructuring documents, called a “plan of adjustment” and “disclosure statement.”
Representatives from the two unions couldn’t immediately be reached for comment. Terms of the deals weren’t clear.
But deals have not been struck with the larger Detroit Police Officers Association and the Detroit Fire Fighters Association.
Now, voting on the restructuring plan can begin after U.S. Bankruptcy Judge Steven Rhodes approved the city’s restructuring documents for distribution to 170,000 creditors.
The city is preparing to mail informational packets to creditors May 12, launching the crucial voting process in the largest municipal bankruptcy in U.S. history.
About 67,000 of the city’s creditors — including retirees and bondholders — will cast ballots on Detroit emergency manager Kevyn Orr’s sweeping plan. The plan would reduce the city’s $18 billion in debt and liabilities and reinvest $1.4 billion over 10 years in services.
The judge approved the city’s bankruptcy disclosure statement, which must contain sufficient information on the restructuring plan for creditors to cast informed votes, as well as the voting packet. Each packet will be individualized to help retirees understand how their individual pension would change.
Creditors will get 60 days to vote. The packets must be returned by July 12.
A majority of voters, representing two-thirds of the debt in each class of creditors, must vote “yes” for the court to certify approval. If they vote no, Rhodes can still approve the restructuring plan if he decides it’s in the best interest of creditors.
“Heck, I feel overwhelmed with this plan,” said Wayne State University bankruptcy law professor Laura Beth Bartell.
Detroit-area bankruptcy attorney Doug Bernstein said it’s a “pleasant surprise” that several groups that previously sought to block Detroit’s bankruptcy are lining up to support the plan.
“And now it’s up to the city to convince Judge Rhodes that the plan is, in fact, doable,” he said.
Rhodes will conduct a massive trial starting in late July to decide whether the city’s bankruptcy restructuring plan is fair to creditors and whether it is feasible.
The city also revealed that:
• If the city successfully spins off the Detroit Water and Sewerage Department to an independent authority or private company within seven years, 50% of the proceeds from the deal could be used to help restore pension cuts.
• The two independent trusts established to manage Detroit’s retiree health care insurance, called Voluntary Employee Beneficiary Association trusts, collectively will receive $450 million to deliver benefits. The city is escaping a $4.3 billion retiree health care liability and will make no future payments on retiree health care after its bankruptcy restructuring is complete, according to the court documents.
• The city also will make no additional payments to its Employees Death Benefit Plan. Retirees who now participate in the plan will be given the option of a one-time lump-sum distribution at the present value of their death benefit. The city will not offer this benefit in the future.
The city’s plan of adjustment incorporates recent deals with two independent pension boards, the U.S. government-appointed Official Committee of Retirees and two retiree associations regarding pension cuts.
http://www.usatoday.com/story/news/nation/2014/05/05/detroit-bankruptcy-payment-plans/8730973/