Detroit to restructure, sell $5.2 billion in water department debt
Updated On: Aug 06 2014 05:27:55 PM EDT
A Detroit bankruptcy judge signed off on a deal Wednesday that will restructure and sell $5.2 billion in Detroit Water and Sewerage Department debt.
The deal promises to reduce costs, free up cash for repairs and possibly lower water bills.
Judge Gerald Rosen, who is chief mediator in the city's bankruptcy case, approved the deal during a hearing on Wednesday.
"It avoids all of the implications associated with bankruptcy because this process is voluntary," said Conrad Mallet, member of the Detroit Water Board.
Jim Fausone, Water Board chairman, said it will help customers, too.
"It's good for the folks at home because, to the extent we can lower the cost of financing, it should lower their rate pressure," he said.
Local 4 bankruptcy expert Doug Bernstein said this plan is outside-the-box thinking.
"This is a great thing. You can't just go with what typically you might use in an ordinary restructure. This requires a tremendous amount of creativity and that's what's been exhibited throughout the process," said Bernstein.
A trial to determine if Detroit gets out of bankruptcy has been delayed by a week to Aug. 21.
Recap: Detroit bankruptcy hearing