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-We have breaking news, very sad news about Detroit.
It is official.
It has become the largest US city ever to file for bankruptcy.
Whether that's Chapter 9, how they go through the motions, I don't know, but Jeff Flock does and he's right near Detroit in Chicago and he's been following the story very closely for years now.
-We have been spending a lot of time in Detroit and following the story, and indeed, it could be-- well, it will be the largest municipal bankruptcy.
It could be as high as $20 billion by the time it's done.
Here's what we're learning right now.
This is from a bankruptcy attorney, not part of this proceeding, but that essentially the city's hand was forced on this by a filing by two pension funds, the General Retirement System which is mostly municipal workers in Detroit and the Police and Fire Retirement Systems.
They essentially filed a sue in Ingham County Circuit Court this week asking that the governor be prevented from letting the city file for bankruptcy.
They contend that the state constitution precludes any kind of messing with their pensions.
The city manager had a plan where these pension funds would have to take about 10 cents on the dollar.
Detroit is in serious financial trouble.
He was trying to work that deal out, but the pension funds said no.
They went and file sued and that then forced the city to go ahead and file for bankruptcy before the other court got involved and perhaps precluded them from doing that.
There's also some separate debt in addition to those pension funds.
There was a swap loss of about $344 million that Bank of America and UBS believed to be the two banks involved in that one.
Apparently, there is a deal, though, with those banks which would allow the city during bankruptcy to still have a revenue stream of about $11 million a month in casino tax revenue.
That would enable the city to continue to function, continue to pay police and firefighters.
Actually, this bankruptcy filing might be a good thing for the city because, as you know, it just kind of puts the creditors at bay for a while, gets the city some sort of a chance to try and get itself back at least to get the police and fire back.
You know, there's a huge problem with arson in the city now, a huge problem with crime, violent crime rate as much as we hear about Chicago's violent crime rate, Detroit's top it per capita.
-The city is in very bad shape right now.
So, this might actually, David, be a positive.
-Well, we will see.
Also, of course, there are a lot of bond holders out there.
We remember what happened to GM-- -Exactly.
-secured bond holders.
-They lost a lot of what they had and may happen again-- -Some of these are secured, and of course, some of them are unsecured, about $9.2 billion [unk] -[unk] with GM, security is not necessarily secure.
-Jeff Flock, than you.
In the mean--
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