Detroit Bankruptcy Judge Decides to Start a Trial on Aug. 21

by San Antonio Attorney

The hearing for Detroit’s bankruptcy plan will no longer be delayed, according to U.S. Bankruptcy Judges Steven Rhodes.

Rhodes has delayed the hearing from last month, but wants to begin the trial on Aug. 21 to find out whether Detroit can get rid of roughly $7 billion in debt. Syncora Guarantee Inc. had asked for extension, arguing that Detroit missed deadlines to submit important documents.

Toyota has committed $1 million to the grand bargain, the basis of the city’s bankruptcy plan that would protect Detroit’s art collection from bolster pensions and creditors. Detroit Institute of Arts needs to raise $100 million. Three automakers have also pledged $26 million earlier. The DIA has reported around $80 million in pledges received.

The grand bargain requires private funding worth $466 million and state tax worth $195 million to reduce pension cutbacks for the city’s 32,000 workers.

Simon Nagata, president of Toyota Motor Engineering and Manufacturing, Inc, said the company wanted to help the city.  Nagata said he previously visited the Samurai exhibit in DIA and was impressed. He hopes Toyota’s investment could encourage others in the auto industry to also do the same.

Several businesses and leaders have committed $26.8 million. Some of them are Penske Corp., Quicken Loans and Rock Ventures, DTE Energy Co., and Blue Cross Blue Shield of Michigan.

Ford Motor Co. foundation has pledged $10 million. General Motors Co. has offered $5 million and $5 million more from the GM Foundation. Chrysler Group LLC has contributed $6 million.

Detroit is the biggest city in the United States to file for bankruptcy. Its plan to eliminate or substantially bring down $18 billion in debt has been agreed upon by a lot of creditors, which include a large number of retirees. But the strategy has yet to be considered by the judge to determine whether the entire plan is reasonable and doable.

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