Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Detroit finds bankruptcy deal with big banks
Author: Joel R. Glucksman
Date: March 14, 2014
Key Contacts
Back
The city of Detroit is still in the process of seeking approval for a plan to restructure its debt, amid complaints from a number of affected parties, including pensioners of the city. In a recent development, on March 3, the city reached a deal with two large investment banks to end expensive interest rate swaps, according to Reuters. This could give the city much needed access to income from its casinos and potentially give it leverage to restructure its debt with other creditors.
The city has made two previous attempts to end the interest rate swaps, but the deals were shot down by U.S. Bankruptcy Judge Steven Rhodes, who felt that the $165 million and $230 million price tags associated with the deals were too expensive for the bankrupt city to afford, according to the news source. The new plan to terminate the swaps, which were used to hedge interest rate risks on some Detroit pension debt, would cost the city only $85 million. In a March 3 filing, the city argued for Rhodes to approve the deal, which it said could help Detroit win federal court approval of a plan to restructure its $18 billion of debt and exit bankruptcy.
This plan would give Detroit “critical funds that we can invest to improve the quality of life in Detroit,” Detroit emergency manager Kevyn Orr told CNN Money.
Judge Rhodes will still have to approve the plan before it can move forward. Rhodes’s dismissal of earlier plans was applauded by some of the city’s other creditors, because it put big banks on the same level as pensioners and other lower-priority creditors, according to the news source.
Detroit filed for protection under Chapter 9 of the bankruptcy law, which, according to Reuters, means that an approval of a deal with a single class of creditors with interests impaired by a bankruptcy could mean that the city could then seek to impose settlement terms on other creditors.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Navigating Director and Officer Liability in Times of Financial Distress
Director and officer liability increases sharply when a company is in financial distress. Decisions that would draw little attention in a healthy business can later be challenged by creditors, shareholders, bankruptcy trustees, and regulators as breaches of fiduciary duty, fraudulent transfers, or oversight failures. Understanding where that exposure comes from, and how to manage it, […]
Author: Michael Mietlicki
Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey
For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success. Key Takeaways The core questions for BESS site selection in New York and […]
Author: Nicholas Wall
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Author: Michael Mietlicki
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Author: Graham Staton
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Author: Michael Mietlicki
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Author: Sean M. Pena
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.