NBC News is reporting that the City of Detroit plans on filing its restructuring plan by the end of 2013. This puts the City’s time frame ahead of the date previously set by Judge Steven Rhodes of the U.S. Bankruptcy Court for the Easter District of Michigan, Detroit Division.
That timeline is more ambitious in some areas than the one proposed by Detroit’s Emergency Manager Kevyn Orr after he filed the city’s bankruptcy petition on July 18.
During Friday’s hearing, Rhodes was expected to lay out a roadmap for the biggest Chapter 9 municipal bankruptcy filing in U.S. history. Detroit must prove it is insolvent and has negotiated in good faith with creditors owed more than $18 billion before Rhodes would allow the city to file a reorganization plan that the judge must then approve.
Where Chapter 7 and 13 bankruptcies do not provide for bankruptcy debtors and bankruptcy creditors negotiating debt amounts, Chapter 9 bankruptcy sets forth for negotiations. Time will tell how these discussions fare and whether or not the city is allowed to proceed in its bankruptcy.
