Last week, the City of Detroit Chapter 11 bankruptcy case saw a handful of developments. First, the City filed a motion seeking approval of a further revised proposed settlement with its swap counterparties. The City now seeks to settle the approximately US$286 million in swap obligations for US$85 million, which amount will be funded on exit from bankruptcy (or as many as 180 days subsequently). The City had previously tried to settle the swap obligations for as much as US$230 million; Judge Stephen Rhodes has twice rejected the City’s efforts to settle. The Court subsequently scheduled a hearing to approve the settlement on April 3.
Second, the City filed notice of revised post-petition financing with Barclays as the proposed lender. The City now requests funding of only US$120 million in ”Quality of Life” financing and no longer seeks funds to repay the swap settlement with the banks. With the reduction in principal, the parties modified the collateral, which no longer includes gaming proceeds but is restricted now to sales tax revenues and the revenues of certain asset sales (excluding others such as art held by the Detroit Institute of Arts).
Finally, the Court slightly modified the hearing on confirmation of the City’s plan of adjustment, postponing the hearing until mid-July (rather than June).