Detroit’s Bankruptcy Trial Delayed Seven Days, Pushing Date Back to Aug. 21
The hearing to determine the outcome of Detroit’s bankruptcy has been delayed a second time.
According to a July 30 ClickOnDetroit.com article, U.S. Bankruptcy Court Judge Steven Rhodes pushed the trial date back seven days to August 21 at the request of some of the city’s creditors. The trial was originally scheduled to take place in July, which was a year after the city first filed for debt reorganization under Chapter 9 bankruptcy.
The primary advocate behind the trial’s delay was creditor Syncora Guarantee Inc., which wanted to delay the hearing until September 29 in order to collect adequate documentation of Detroit’s settlements with some of its creditors, a Reuters report stated.
At its trial, the city of Detroit is intending to eliminate or reduce a good chunk of the $18 billion in debt it has accrued over recent years.
Much of the debt comes from private creditors and bond insurers, ClickOnDetroit.com reports, whose interest rates are much higher than the Federal Reserve’s 0.25% interest rate for consumer purchases.
And while many creditors have approved of Detroit’s plan to adjust its debts, the plan won’t be allowed to move forward until a judge deems the strategy “fair and feasible,” according to ClickOnDetroit.com.
Detroit’s private creditors and insurers will likely lose the millions of dollars they have loaned out to the city — and as a result, the bankruptcy trial will likely last for several weeks.