Detroit filed for Chapter 9 bankruptcy last week when
…Emergency Manager Kevyn Orr’s attempt to reach out-of-court settlements could not overcome opposition from unions, retirees and a long list of lenders….”
Orr’s spokesman Bill Nowling had much of it right:
Pension boards, insurers, it’s clear that if you’re suing us, your response is “no.” We still have other creditors we continue to have meetings with, other stakeholders….
But that’s only part of it. The pensions and unions are owed the largest amount out of Detroit’s total $18 billion debt, but they’re not the only ones who were intransigent. Bank of America and UBS AG agreed to a restructuring of the debt Detroit owed them (chump change alterations on less than $500 million of that debt), but they were nearly the only ones actually willing to deal. Nearly all the remaining creditors each insisted, regardless of the city’s ability to pay, on holding out for their full cut, or as much of it as they could squeeze, and to hell with the rest of the creditors.