Judge Rhodes issued an amended scheduling order of important dates for the plan of adjustment hearing process:
May 2, 2014 is the final date for filling the disclosure statement that is to be sent to all creditors and which must incorporate all court ordered changes in the proposed disclosure statement.
July 24, 2014 is the date for the start of the hearing on plan confirmation.
In addition, momentum is building for a proposed plan of adjustment that has many supporting creditors, with the exception, possibly of some capital market creditors including insurers.
Judge Rhodes approved the proposed settlement between the Swap counterparties and the City of Detroit. This settlement, the third attempt by the City of Detroit to settle its potential liabilities to the Swap counterparties, saved the City of Detroit a potential liability of hundreds of millions of dollars. No one should underestimate the significance of this settlement because, as part of the settlement, the Swap counterparties agreed to support the proposed Plan of Adjustment, thus giving the City of Detroit an impaired, accepting class of creditors, and allowing the City of Detroit to use the “cramdown” provisions of the Bankruptcy Code if a plan is not otherwise negotiated. I would expect negotiations to accelerate between the City and other creditor groups. There are already reports that there is significant progress in negotiating with retiree groups. Stay tuned.
The next interesting hearing in the Detroit Bankruptcy is April 4, 2014 when the court will hear argument on whether the retiree claims have been properly classified. Remember, the proposed plan creates 2 classes of retirees - the uniform (Police and Fire Retirement System) are in one class and the participants in the General Retirement System are in another. Their treatment is different with the uniforms receiving a higher percentage of their pension benefits. That might be explained by the data which suggests the Police and Fire Retirement System is less underfunded than the General Retirement System Fund. Briefs are due on March 28, 2014, so I will provide a concise comment on Monday, March 31, 2014 and again after the court rules.
The hearing on objections to the adequacy of the disclosure statement is April 14, 2014 with briefs due by April 1, 2014. Because the disclosure statement was incomplete when filed, I would expect strong objections and efforts to cure the objections before the hearing.
April 14, 2014 is the deadline for filing plan objections, except for individual bond holders and individual retirees whose deadline is June 30, 2014. We will see what progress has been made in mediation.
The confirmation hearing is set to begin on July 14, 2014. Expect furious activity in the weeks before.
Important Dates in Detroit's Bankruptcy From the Detroit Free Press:
April 14: Judge Steven Rhodes is asked to rule on whether the disclosure statement with details supporting the city’s plan of adjustment provides enough information.
April 14: Retirees and creditors of record by this date are entitled to vote on the plan of adjustment and will receive a packet of information as well as the ballot.
April 28: Deadline to send out ballot packages so creditors can vote on the plan of adjustment
April 28: Hearing on legal arguments against the restoration plan
June 26: Hearing of any disputes on who is eligible to vote on the plan of restoration
June 30: Deadline for individual bondholders and retirees to object to the restructuring plan and deadline for ballots to be returned
July 11: City or the balloting agent must file a summary of the voting results.
July 16: Hearing to confirm Detroit’s massive bankruptcy restructuring plan starts. Last scheduled hearing date is Aug. 1.
September: Emergency Manager Kevyn Orr’s term ends. He can be voted out by Detroit City Council.
Anytime: U.S. 6th Circuit Court of Appeals will consider creditors’ attempt to overturn the bankruptcy and prevent pension cuts.
There have been objections filed to the scheduling of procedures, deadlines and hearing dates relating to the proposed plan. The Court has proposed quick dates for various stages of the confirmation process including the confirmation hearing in June. Creditors are objecting to the speed of the scheduling, saying there is too little time for discovery of the various aspects of the proposed plan. Creditors are also asking for time to address the City art treasures which creditors argue have not been adequately appraised. The most interesting and, in my view compelling, argument comes from creditors and committees who represent large groups of "beneficial holders" who will require adequate time to receive the disclosure statement and plan and ballots to vote. These objections to the scheduling could be resolved at a hearing as early as Wednesday March 5, 2014.
Update: 2/21/2014CBS Detroit/WWJ