Detroit Closer To Exiting Bankruptcy After Swaps Deal Approval
DETROIT, April 11 (Reuters) - Detroit's plan to get out of bankruptcy cleared a major hurdle on Friday when a U.S. Bankruptcy Court judge approved the cash-strapped city's third attempt at settling costly interest-rate swap agreements with two investment banks.
The city will pay $85 million to UBS AG and Bank of America unit Merrill Lynch Capital Services, much less than had been proposed on two previous attempts.
The banks join a growing list of supporters for Detroit's plan to adjust $18 billion of debt and other obligations.
With this deal in place, along with a recent settlement with three bond insurers, the city now has more supporters among key creditors to exit bankruptcy, even if it faces opposition from other creditors, including the city's labor unions and pension funds.
Kevyn Orr, the city's state-appointed emergency manager filed the biggest municipal bankruptcy in U.S. history in July as the city grappled with a huge debt load and fears that the banks could demand a big payment to terminate the swap agreements.