Detroit city employees and retirees face losing up to 34% of their promised pension benefits under the city’s bankruptcy plan filed in court Friday.
The proposal comes seven months after the city sought bankruptcy court protection in an effort to shed nearly $10 billion in debt.
The plan proposes deep cuts in the health care coverage for retirees. And there could be even deeper cuts in what the city is offering to pay banks and other investors holding the city’s debt. A summary of the plan on the city’s Web site said bondholders would get new securities worth 20% of amount they are still owed.
The plan is still a long way from winning approval of the court and makes some assumptions that cash the city does not yet have will be available. For example, it is counting on the city getting more than $800 million from a group of private foundations and the state of Michigan to keep the city’s museum from having to sell off its art to pay creditors.
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