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On July 18, the City of Detroit filed for protection under chapter 9 of the Bankruptcy Code, making Detroit the largest municipality to file for chapter 9 relief in United States history. Detroit is seeking to restructure approximately $18 billion in accrued obligations, consisting of approximately $11.9 billion in unsecured obligations and $6.4 billion in secured obligations. Prior to the bankruptcy filing, the City offered to pay unsecured creditors a pro rata distribution of $2 billion in principal amount of interest-only, limited recourse participation notes.
Detroit filed several significant motions in its first days in bankruptcy. They included:
Bankruptcy Judge Steven W. Rhodes has scheduled a “first day” hearing on these and other matters for July 23. We will continue to update developments in the Detroit Chapter 9 case.
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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
© Orrick - Structured Finance Group
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