Detroit may not exit bankruptcy until December 15

Reuters News
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Posted: Dec 05, 2014 4:05 PM

By Serena, Marie and Daniels

DETROIT (Reuters) - Detroit might not be ready to exit the biggest municipal bankruptcy in U.S. history until Dec. 15, a spokesman for the city's emergency manager said on Friday.

"(The) 15th is the target we think the city can meet," said Bill Nowling, the spokesman.

An attorney for the city said last month Detroit could potentially exit bankruptcy around Dec. 8-10 as it incorporated the debt adjustment plan into its budget. The plan was approved by a U.S. Bankruptcy Court judge on Nov. 7.

Detroit, which was sinking under heavy debt, loss of population and falling revenue, filed for bankruptcy in July 2013. Under the plan, the city will shed about $7 billion of its $18 billion of debt and obligations.

Kevyn Orr, the city's state-appointed emergency manager, told a state-created financial review commission on Friday that he plans to sign his last order soon. It will inform Michigan Governor Rick Snyder and the commission that Detroit's financial emergency is over and that he is resigning from the post he has held since March 2013.

Orr also said Detroit's two-year budget will eliminate a carry over deficit of about $58 million and incorporate a reserve fund totaling $62 million, or 5 percent of appropriations required under state law. The budget will also provide $49 million that could be tapped to fund restructuring initiatives in fiscal 2016, he added.

(Additional reporting by Karen Pierog in Chicago)