Detroit's Plan Submission -- Now What?

02/22/14

Much excitement in our nerdly circles is arising about Detroit's plan of adjustment, just filed yesterday.  This has gotten me thinking about what's next (other than the obvious ongoing cajolling/negotiations).  Three ruminations thereon:

1. The future: the media are focused on the haircuts the major creditors are being asked to take, which is fine, but what's more interesting to me is the capital expenditures the city proposes investing -- about a billion and a hallf.  This is important, because...

2. Feasibility.  Even if the parties don't raise it, Judge Rhodes has an obligation to gauge feasibility.  He is not going to want a chapter 18.  (Cf. Valejo.)  This means that there has to be an ongoing plan of investment, services, etc. that will attract/retain a vibrant base of taxpayers (plus such banal matters as financial transparency and accountability).  This is as important if not more important than the creditor haircuts.  But let's not forget...

3. Pension impairnment constitutionality appeal.  CA6 just accepted the certification (but declined expedition).  Will that reignite the pension fight and distract from signing on, or did CA6's coincidental timing of its order upon plan release mean the pension funds are on board?  This is a development I can't yet gauge well.  Given CA6 earlier stalled on issuing the order (pending a mediation update), I tentatively think the non-expedited route is a plan to slow-boat this issue in the hopes a consensual plan is done and everyone can do the equitable mootness dance. 

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