Tue July 22, 2014
Detroit Pensioners Approve City's Bankruptcy Plan
Originally published on Tue July 22, 2014 8:19 am
Detroit moved one step closer toward bankruptcy after crossing a major hurdle on Monday.
With a large margin, retired police and firefighters approved modest cuts in their pensions that are part of the city's bankruptcy plans.
"About 82 percent of retired and active Detroit police and firefighters who voted overwhelmingly approved the city's plan to reduce their inflationary increases but preserve their base pensions, according to balloting results filed late Monday night in U.S. Bankruptcy Court.
"Members of the General Retirement System approved the city's plan on a margin of approximately 73 percent yes, 27 percent no during a historic 60-day vote that ended July 11, the results show. Detroit's plan calls for base pension cuts for GRS members of 4.5 percent.
"Detroit also got 88 percent of retirees owed lifetime health insurance benefits to accept $450 million for a $4.3 billion liability — one of the biggest debts the city could shed if the reorganization plan is approved by U.S. Bankruptcy Judge Steven Rhodes."
The Detroit Free Press reports that city retirees also endorsed the city's plan to allow the Detroit Institute of Art "to spin off as an independent institution."
The support of city pensioners was seen as a major hurdle toward a successful bankruptcy. As the News puts it, a year ago, this kind of support was seen as "inconceivable."
The Free Press quotes University of Michigan bankruptcy law professor John Pottow as saying that the city's emergency manager Kevyn Orr must be very happy.
"Orr's got to be having a little celebration tonight," Pottow told the paper. "It's not over yet. They've got to go to court and have another fight. But the big pieces are falling into place. This is exactly what Judge Rhodes is going to want to see."