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Detroit defaults on up to $18.5 billion in debt to avoid filing for bankruptcy
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| Contributor | Scott³ |
| Last Edited | Scott³ Jun 14, 2013 06:13pm |
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| Category | News |
| Media | Newspaper - New York Daily News |
| News Date | Saturday, June 15, 2013 12:00:00 AM UTC0:0 |
| Description | "Detroit defaulted on some debt on Friday and proposed most creditors receive just pennies on the dollar owed by the "insolvent" city in order to avoid the largest municipal bankruptcy filing in U.S. history.
In a forceful opening salvo of negotiations with holders of as much as $18.5 billion of debt, Detroit Emergency Manager Kevyn Orr announced a moratorium on some principal and interest payments, including one due on Friday.
Under his proposal, Orr said unsecured debt holders would be paid less than 10 cents on the dollar, but some creditors would get a bit more based on city revenue. Some $11.5 billion of the debt is unsecured and $7 billion secured, according to figures presented by Orr.
Orr said secured creditors would get better treatment, although how much better was not specified.
"We may try to get a discount from them, but the reality is they are secured," Orr said. Secured credit means an asset is pledged to back the debt, for example Detroit has secured its interest rate swap agreements with casino revenue." |
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