Traverse City Record-Eagle

Archive: Tuesday

August 19, 2013

Creditors file objections to Detroit bankruptcy

DETROIT (AP) — Individual creditors who fear losing their pensions and paying more for health care were among those who began filing objections on Monday to Detroit's request for bankruptcy protection, the largest municipal filing in U.S. history and a move aimed at wiping away billions of dollars in debt.

Federal Judge Steven Rhodes set Monday as the eligibility objection deadline in the bankruptcy petition by Detroit emergency manager Kevyn Orr.

Attorneys for creditors — including bond holders, insurers, banks, employee pension funds, individuals and companies that provided services — have until just before midnight to file objections electronically. City residents filing for themselves began dropping off their objections Monday morning at the court.

A restructuring team representing Detroit's Police and Fire Retirement System and General Retirement System, the city's two largest creditors, was expected to file objections by Monday's deadline.

Bankruptcy filings show the pension systems are the top two unsecured creditors. The city has about 21,000 retired workers who are owed benefits, with underfunded obligations of about $3.5 billion for pensions and $5.7 billion for retiree health coverage.

"I need my pension for basic human needs," wrote Mary Dugans in her one-page filing Monday. "Additionally, I'm 80 years old with age related medical conditions. Therefore, I have to pay for medical co-pays as well as for prescribed medications. Please consider my situation as you approach this important matter. Thanks."

Michael Benson, a retired water department employee, objected to the use of retiree pensions "for any purpose other than retirees."

"I believe the bankruptcy filing ... is illegal and morally wrong," he wrote. "Surely there are other options available to the city."

But Orr, hired in March by the state to fix Detroit's finances, has said there are no other options for Detroit. The city's budget deficit has chronically hovered near or above $300 million over the past few years,

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