Deadline passes for thousands of creditors in Detroit bankruptcy restructuring vote
The deadline passed Friday for thousands of creditors to vote on Detroit emergency manager Kevyn Orr's bankruptcy restructuring plan for the city.
Ballots had to be received no later than 5 p.m. EDT by a consulting company in California to be counted in the largest municipal bankruptcy in U.S. history.
Creditors voted on proposals to resolve the debt they are owed. The bankruptcy court has set July 21 as the date for it to receive the voting results.
"As voting has come to a close on the Plan of Adjustment, the city will now tabulate and check the results," Orr spokesman Bill Nowling told The Associated Press in an email just after Friday's deadline.
The city's vote administrator then will prepare an affidavit for the bankruptcy court "attesting to the voting results by creditor classes," Nowling said.
About 32,000 retirees, current and former city workers were asked to vote on a proposal to cut pensions for non-uniformed retirees by 4.5 percent and erase cost-of-living allowances. The proposal also eliminates some cost-of-living payments for retired police and firefighters.
More "no" than "yes" votes could result in deeper pension cuts.
The city's bankruptcy trial starts next month.
Without a confirmation of Orr's plan — or other plans down the road — the city's bankruptcy could be dismissed, said Michael Sweet, a bankruptcy attorney with Fox-Rothschild's San Francisco office.
"The alternative would be very bad," he said. "Without a plan there would then be a race to the courthouse by creditors" filing lawsuits to get the money they're owed.
Orr filed for bankruptcy a year ago, saying Detroit's debt was about $18 billion. About $3.5 billion was listed as unfunded pension liabilities.
Last month, the city's General Retirement System and Police and Firefighters Retirement System recommended their members vote "yes" on Orr's proposal for them.
Sweet said Orr's team has been working hard on deals it can get approved.
"They are trying to make something that really works," he said.