Detroit bankruptcy judge rejects deal with banks - New York News

Detroit bankruptcy judge rejects deal with banks

Posted: Updated:
(AP Photo/Carlos Osorio, File). FILE - In this Dec. 10, 2013 file photo, visitors look at the Detroit Industry Murals by the Diego Rivera at the Detroit Institute of Arts in Detroit. (AP Photo/Carlos Osorio, File). FILE - In this Dec. 10, 2013 file photo, visitors look at the Detroit Industry Murals by the Diego Rivera at the Detroit Institute of Arts in Detroit.
(AP Photo/Paul Sancya, File). FILE - In this July 10, 2012 file photo, the 1970 Alexander Calder sculpture "Young Woman and Her Suitors" is shown outside the Detroit Institute of Arts in Detroit. (AP Photo/Paul Sancya, File). FILE - In this July 10, 2012 file photo, the 1970 Alexander Calder sculpture "Young Woman and Her Suitors" is shown outside the Detroit Institute of Arts in Detroit.

By DAVID EGGERT AND ED WHITE
Associated Press

LANSING, Mich. (AP) - A judge overseeing Detroit's bankruptcy again rejected a deal Thursday to end a disastrous financial agreement with major banks, dealing a blow to officials who want to put the issue behind them as they work on a broader plan to get the city out of Chapter 9 in the largest public filing in U.S. history.

Judge Steven Rhodes turned down a $169 million compromise, saying "it's just too much money." He had rejected a $230 million deal on the same grounds in December.

Rhodes didn't offer his own number publicly but encouraged all sides to keep talking. He then cleared the courtroom to talk privately to lawyers.

"It's higher than the highest reasonable number. ... By any rational analysis, it's not close," the judge said moments earlier.

"This court must be the one to stop it if necessary. It is necessary here," Rhodes said.

In 2009, Detroit pledged a critical revenue source, casino taxes, as collateral to avoid defaulting on pension debt payments. That agreement allowed the city to get fixed interest rates on bonds with UBS and Bank of America. But it backfired when rates dropped during the recession.

Detroit had lined up a loan to pay for the settlement.

Emergency manager Kevyn Orr wants to get the "swaps deal," as it's known, out of the way so he can focus on proposing a sweeping plan to deal with the city's long-term debt of $18 billion. He's pledged to unveil his proposal this month, weeks ahead of schedule.

Gov. Rick Snyder met with lawmakers Thursday in the Michigan capital of Lansing to discuss the possibility of contributing state money to shore up Detroit's pension plans and prevent the sale of city-owned art, days after foundations committed $330 million to the effort.

The Republican governor spoke with the senators behind closed doors and may soon ask the GOP-controlled Legislature to match the foundations' contribution over a number of years, possibly in his February budget proposal. Senate Majority Leader Randy Richardville confirmed the talks but said no request has been made to legislators, nor have they made any commitments.

Richardville said he was "cautiously optimistic" that a solution "will come forth sometime in the near future."

"Detroit is hugely important to everybody in this state," he said.

National and local foundations are committed to providing millions to prevent the sale of city-owned art at the Detroit Institute of Arts and soften cuts to pensions of Detroit retirees.

Orr has said two pension funds are underfunded by $3.5 billion. A deal involving the state and foundations would help retirees but probably wouldn't alleviate all their pain in a final plan to fix the shortfall.

Rhodes' rejection of Detroit's settlement with the banks was a surprise. Two judges who acted as mediators in the Christmas Eve deal even took the unusual step of publicly endorsing it in a Dec. 30 court filing. The $169 million deal had included $4 million in certain costs.

"This settlement ... can best be captured and characterized by the admonition, 'Do not allow the perfect to become the enemy of the good,'" wrote Chief Detroit U.S. District Judge Gerald Rosen and U.S. Bankruptcy Judge Elizabeth Perris of Oregon.

___

White reported from Detroit; Associated Press writers Jeff Karoub contributed to this report.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Download the FOX 2 Apps


  • FOX 2 News Five-Day Forecast
  • Local NewsLocal NewsMore>>

  • New Jersey detective acquitted in Maryland highway shooting

    NJ detective acquitted in Md. highway shooting

    Wednesday, July 30 2014 2:16 PM EDT2014-07-30 18:16:51 GMT
    A jury has found a New Jersey detective not guilty in the slaying of a driver during an alleged road-rage incident. Joseph Walker, 41, an investigator for the Hudson County, New Jersey, prosecutor's office, was found not guilty on all counts on Wednesday in Anne Arundel County Circuit Court. He had been charged with first-degree murder in the death of Joseph Harvey, 36, of Landsdowne.
    A jury has found a New Jersey detective not guilty in the slaying of a driver during an alleged road-rage incident. Joseph Walker, 41, an investigator for the Hudson County, New Jersey, prosecutor's office, was found not guilty on all counts on Wednesday in Anne Arundel County Circuit Court. He had been charged with first-degree murder in the death of Joseph Harvey, 36, of Landsdowne.
  • Amazon ships first order from New Jersey

    Amazon ships first order from New Jersey

    Wednesday, July 30 2014 1:31 PM EDT2014-07-30 17:31:08 GMT
    The world's biggest online retailer has shipped its first order from its new distribution center in New Jersey. The Interplak All-In-One Sonic Water Jet was sent from Robbinsville to an Amazon customer in New York. Amazon says it expects to employ more than 1,000 full-time employees at the 1 million-square-foot center just outside of Trenton.
    The world's biggest online retailer has shipped its first order from its new distribution center in New Jersey. The Interplak All-In-One Sonic Water Jet was sent from Robbinsville to an Amazon customer in New York. Amazon says it expects to employ more than 1,000 full-time employees at the 1 million-square-foot center just outside of Trenton.

  • Injured detective in Village shootout leaves hospital

    Injured detective in Village shootout leaves hospital

    Wednesday, July 30 2014 1:28 PM EDT2014-07-30 17:28:00 GMT
    The third law enforcement officer injured in a Manhattan shootout is out of the hospital. The NYPD says Detective Mario Muniz was left Bellevue Hospital shortly after noon on Wednesday. Hundreds of his fellow police officers cheered as Muniz left the hospital in a wheelchair pushed by his NYPD patrol partner, Joseph Trovato.

    The third law enforcement officer injured in a Manhattan shootout is out of the hospital. The NYPD says Detective Mario Muniz was left Bellevue Hospital shortly after noon on Wednesday. Hundreds of his fellow police officers cheered as Muniz left the hospital in a wheelchair pushed by his NYPD patrol partner, Joseph Trovato. Police Commissioner William Bratton has said the detective's protective vest may have saved his life.


Powered by WorldNow
Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices