Detroit set to exit bankruptcy on Wednesday as local officials retake control
Detroit’s odyssey through the biggest-ever U.S. municipal bankruptcy will end on Wednesday when the city’s debt adjustment plan will take effect, Michigan Governor Rick Snyder’s office said on Tuesday.
The city, which filed for bankruptcy in July 2013, won approval on Nov. 7 from a federal court judge for its plan to shed about $7 billion of its $18 billion in debt and obligations.
In a letter, Snyder accepted Detroit Emergency Manager Kevyn Orr’s declaration that the city’s financial emergency is over and that it was time for his job to end. Snyder appointed Orr, a former corporate bankruptcy attorney at law firm Jones Day, to run Detroit in March 2013.
Orr’s departure will restore complete control over the city to Mayor Mike Duggan and the city council, although a state-created oversight board is in place to review and approve financial matters.
Detroit is expected to close deals to distribute bonds to settling creditors, including bond insurers, on the effective date. The city is also planning to borrow $275 million through Barclays Capital to retire $120 million of debt, pay settlements and fund restructuring initiatives.
(Reporting by Karen Pierog; Editing by Dan Grebler)