Judge Orders Detroit To Renegotiate Bank Debt Deal
DETROIT (WWJ/AP) - A federal bankruptcy judge has told state-appointed Detroit emergency manager Kevyn Orr and his team to renegotiate a better debt settlement with two banks.
Judge Steven Rhodes suspended a hearing Wednesday on whether the deal would be allowed.
“In the middle of what was to be a three-day trial, the judge basically says no; he needs more information,” explained WWJ Legal Analyst Charlie Langton.
The deal involves a $350 million loan from Barclays. About $230 million would be used to fully pay off a complicated $1.4 billion deal with the banks to cover city pension debt. The rest would be used on city services.
“The city wanted that $350 million, and Orr testified earlier that if the city doesn’t get that money, it could to be in bad, bad shape,” Langton said.
“Also, because the city has already defaulted on the old loan, now the city risks losing $170 million a year in casino money that really is the life blood of the city,” he said.
Lawyers for Detroit said they’ll renegotiate Thursday with the banks and inform Rhodes Friday about their progress.
Detroit retirees and pensioners oppose the deal with the two banks.
On Dec. 3, Rhodes approved Orr’s petition to take Detroit into bankruptcy. Orr says Detroit has at least $18 billion in debt.
(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)