Detroit

Detroit will emerge from insolvency proceedings after U.S. Bankruptcy Judge Steven Rhodes approved its Chapter 9 bankruptcy today as fair and feasible, the Detroit Free Press reports. The plan will give the city the authority to cut 74 percent, or $7 billion, in unsecured debt and reinvest $1.4 billion over 10 years in public services and blight removal. Pensioners will have 4.5 percent cuts to their checks and the elimination of cost-of-living increases.

Detroit's bankruptcy is the largest municipal insolvency in Ameircan history.

Detroit's future is in the hands of U.S. Bankruptcy Judge Steven W. Rhodes, the New York Times reports: If the judge "approves a blueprint drawn up by Detroit officials to eliminate more than $7 billion of its estimated $18 billion in debts and to invest about $1.5 billion into the city’s now dismal services, it will mark the beginning of the end of the nation’s largest-ever municipal bankruptcy. The outcome will set this troubled city’s new course for the coming decades, perhaps longer." Rhodes must decide if the plan is equitable, feasible and in the best interests of creditors, the Times also reports.

Judge Steven W. Rhodes of United States Bankruptcy Court blocked Detroit's plan to "pay $165 million to two big banks to extricate itself from some long-term financial contracts that have been costing the bankrupt city tens of millions of dollars a year," The New York Times reports. The judge said that the payment is too expensive.

The judge's rejection of the payout was a surprise, The Times further reports. The judge said that, instead of paying the $165 million to Bank of America and UBS to get out of interest-rate swap contracts (that are using Detroit's tax dollars earned from local casinos as collateral), Detroit could sue to get out of the contracts.

Detroit Free Press reports: "The city of Detroit today officially became the largest municipality in U.S. history to enter Chapter 9 bankruptcy after U.S. Bankruptcy Judge Steven Rhodes declared it met the specific legal criteria required to receive protection from its creditors." Detroit has $18 billion in debt and long-term liabilities, the paper also reports.

The Detroit Free Press reports on Gov. Rick Snyder's historic testimony in a federal  court trial over whether Detroit qualifies for bankruptcy. Snyder testified that he "knew that he had the power to make Detroit’s bankruptcy filing contingent on protecting pensions — but he chose not to exercise it and impede efforts to fix the beleaguered city," the newspaper reports.

The Free Press also reports: "The Michigan Constitution protects public pensions as a 'contractual obligation' that cannot be 'diminished or impaired,' but federal bankruptcy law allows contracts to be severed."

Snyder is going to testify again today.