Emergency Manager: Detroit Debt Deal Necessary
DETROIT (AP) — Detroit's state-appointed emergency manager says an agreement to pay off banks and settle millions of dollars in debt tied to an interest rate swap deal would end a "sordid tale."
Kevyn Orr testified Friday in federal court that the proposal to terminate the deal for $165 million is best for Detroit. He says it removes significant financial risks and allows the nation's largest public bankruptcy restructuring to proceed.
The payoff had been $220 million, and Judge Steven Rhodes ordered the city to negotiate a better deal. He must approve the settlement that's opposed by pension systems.
Detroit pledged casino tax revenue in 2009 as collateral to avoid defaulting on pension debt payments. The swaps allowed Detroit to get fixed interest rates on pension bonds with UBS and Bank of America.