Detroit Nears Financing Exit, Creditor Accord, Court Told

Detroit has received inquiries from “quite a few” groups interested in financing its exit from bankruptcy and may settle one more creditor dispute before an Aug. 21 trial over its debt-cutting plan, a lawyer for the city said.

During a meeting with a judge today on the city’s $18 billion bankruptcy case, Detroit’s attorney Heather Lennox didn’t say which creditor group it’s negotiating with or what issues may be settled. The city is close to sending out a second round of bid requests for its plan to borrow about $300 million to finance its exit from bankruptcy, she said.

Detroit has settled many of its biggest creditor disputes, reaching accords to cut pensions and pay less than it owes on tax-obligation bonds. It has been in confidential negotiations with creditors of its water and sewer department.

U.S. Bankruptcy Judge Steven Rhodes scheduled today’s meeting to ask attorneys how he can further shorten a trial on whether the city’s plan to reduce debt should be approved. Rhodes refused to push back the opening of the trial, but said he may reconsider if the city announces a major new settlement.

“I’ll keep an open mind,” he told lawyers.

Detroit filed for bankruptcy last year, saying decades of economic decline left it without enough revenue to provide basic services.

Last month, Rhodes delayed the start of the trial from Aug. 14 to Aug. 21 and cut five days from the early part of the schedule. The trial is scheduled to conclude the fourth week of September.

The case is In re City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).

To contact the reporters on this story: Steven Raphael in Detroit at sraphael5@bloomberg.net; Steven Church in Wilmington, Delaware at schurch3@bloomberg.net

To contact the editors responsible for this story: Andrew Dunn at adunn8@bloomberg.net Joe Schneider, Fred Strasser

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