Although the Detroit municipal bankruptcy case hasn’t been the largest in history it certainly has been one of the most talked about since its filing in 2013. After much debate and negotiation, Detroit’s pension board and retirees’ groups have stated a tentative agreement has been reached.
With nearly $18 billion of debt to resolve, Detroit hasn’t had an easy road to financial recovery. Originally planning to slash pension and retiree funds by 26 percent the tensions quickly rose. Citing the steep reduction in pension and retiree funds were the same reduction in payments to be made to other key creditors, like banks, Detroit has fought hard to gain approval to move forward; but recent agreements prove they may have just lost that battle.
Late last week, the city and retiree groups have announced a tentative agreement that could serve both parties well if approved. The settlement outlines a minimal 4.5 percent reduction in pension checks, compared to the originally proposed 26 percent. Retired police officers and firefighters would see no reduction in their current checks instead of the originally proposed 6 percent reduction. Cost of living increased would be terminated for retired municipal workers as well to help offset the costs of the minimal pension reductions. In return the pension and retiree groups agree to help the city solidify a further reduction in the city’s cost by receiving an $800 million from charitable foundations.
The final vote and decision is expected in the coming weeks.
Read more about the Detroit bankruptcy case from our Dayton bankruptcy lawyer‘s blog here: https://www.debtfreeohio.com/bankruptcy-information/news/detroit-pension-funds-caught-in-midst-of-bankruptcy-appeal/