City of Detroit Files Proposed Plan of Adjustment in Bankruptcy Proceedings

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On February 21, the City of Detroit filed a proposed plan of adjustment and disclosure statement in its Chapter 9 bankruptcy proceedings. The proposed plan would provide general obligation bond claims with a 20 percent recovery. It proposes to settle pending litigation with each holder of certificates of participation with a claim for 40 percent of face value. Those reduced claims would then receive a 20 percent recovery. Pension beneficiaries would receive a range of recoveries generally greater than 20 percent of their claim amount. The plan also proposes to spin off the Detroit Water and Sewerage Department. This proposed plan is likely the beginning of a highly controversial process. Disclosure Statement. Plan of Adjustment.