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RPT-Detroit creditors brace for haircuts, or worse, at meeting to avoid bankruptcy

Detroit's creditors will begin to learn on Friday morning what they can recover without driving the financially troubled city into bankruptcy when the city's emergency manager unveils his restructuring plan. Manager Kevyn Orr has dropped hints that creditors would fare better by compromising now rather than in court should he opt to file what would be the biggest municipal bankruptcy in U.S. history. He has begun laying a choice before creditors: Work with him by accepting cuts to what they are owed, or face the prospect of a Chapter 9 bankruptcy proceeding where they might have little influence on the outcome.   "I have a very powerful statute," Orr said at his first meeting with the public on Monday, referring to Michigan's new emergency manager law. "I have an even more powerful Chapter 9. I don't want to use it, but I am going to accomplish this job. That will happen." Orr, the bankruptcy attorney Michigan officials tapped in March to run th

Detroit to stop making some debt payments, emergency manager says

Detroit's emergency manager on Friday called for "shared sacrifice" among all the city's creditors and said payments on certain outstanding bonds would stop immediately. _0"> Kevyn Orr proposed that creditors, including bondholders and pension funds, give up some of the $17 billion they are owed by Detroit to help the insolvent city avoid filing what would be the biggest municipal bankruptcy in history.   The moratorium on principal and interest payments on the city's unsecured debt, including a $34 million payment on pension certificates of participation due on Friday, would allow the city to conserve cash needed to provide services to residents, Orr said. Unsecured creditors, including bondholders and pension funds, will receive a pro rata share of $2 billion of notes the city would issue and pay off as its financial circumstances improve. City workers and retirees would also face changes to their pensions and health care coverage "consistent

Detroit in default if pension certificate payments not made-Fitch

Credit rating agency Fitch said it would consider Detroit to be in default if it stops making payments on certain obligations as indicated Friday by the city's emergency manager. _0"> Emergency manager Kevyn Orr told city creditors at a meeting on Friday that Detroit would stop making payments on some debt, including a $34 million payment on pension certificates of participation due on Friday. "If the payment doesn't get made, we would downgrade the rating from the current level of 'CC' to 'D,' for default," said Arlene Bohner, Fitch's director and manager of the Midwest/Great Lakes Tax Supported Group.  

Detroit's Orr, after meeting creditors, says bankruptcy still possible

Detroit Emergency Manager Kevyn Orr said he still sees a 50/50 chance the city will have to file the largest municipal bankruptcy in U.S. history. _0"> Orr spoke after he met with holders of some $17 billion in Detroit debt and called on them to accept a substantial cut in the money they are owed. He also announced at the meeting a moratorium on some debt service payments, which Fitch Ratings said amounted to a default on those bonds.

S&P cuts Detroit bond ratings on expected default

Standard & Poor's Ratings Services dropped Detroit's credit ratings to CC from CCC-negative on Friday, citing the city's expected default on outstanding pension debt. _0"> Kevyn Orr, the city's emergency manager, released a restructuring plan that calls for a halt to debt service payments on unsecured debt, starting with a $34 million payment due Friday. "Standard & Poor's rates an issue CC when we expect default to be a virtual certainty, regardless of the time to default," the credit rating agency said in a statement.   S&P, which just downgraded Detroit's ratings on Wednesday, also kept a negative outlook on the CC rating for the city's general obligation and pension debt due to the potential of a Chapter 9 municipal bankruptcy filing.

Montenegro eyes bankruptcy for stricken aluminium plant

The Montenegrin government filed a court motion on Friday to consider bankruptcy for the country's single biggest industrial employer, indebted aluminium plant KAP, which faces having its electricity cut off over unpaid bills. _0"> Kombinat Aluminijuma Podgorica employs 1,200 people and accounted for 4.7 percent of the tiny Adriatic republic's economic output last year. But the debt of the company, which is jointly owned by the state and the Central European Aluminium Company of Russian billionaire Oleg Deripaska, amounts to some 350 million euros ($467 million), equivalent to one tenth of gross domestic product (GDP). It soaks up 3 million euros of state subsidies every month and lost 16.2 million euros in the first quarter of the year. The motion, initiated by the finance ministry, foresees bankruptcy management taking control of KAP cash flow, assets and liabilities until the court rules on July 16 whether to declare the company bankrupt, said court-appointed

UPDATE 4-Detroit to stop paying some debt, putting it in default

Detroit said on Friday it would stop making payments on some of its about $18.5 billion debt, which would put it in default, and the "insolvent" city called on most of its creditors to accept pennies on the dollar to help it avoid the largest municipal bankruptcy filing in U.S. history. In a forceful opening salvo of negotiations with debt holders, Detroit Emergency Manager Kevyn Orr announced a moratorium on some principal and interest payments, including one payment he said was due on Friday.   Under his proposal, Orr said unsecured debt holders would be paid less than 10 cents on the dollar, but some creditors would get a bit more based on city revenue. Some $11.5 billion of the debt is unsecured and $7 billion secured, according to figures presented by Orr. Orr said secured creditors would get better treatment, although how much better was not specified. "We may try to get a discount from them, but the reality is they are secured," Orr said. Secured credit