Detroit, which made the largest Chapter 9 municipal bankruptcy filing in U.S. history, on Thursday filed a request for proposals for $350 million in unprecedented financing, the city emergency manager’s office said.
Detroit is the first large U.S. city to seek so-called debtor-in-possession (DIP) financing after asking for bankruptcy court protection.
The city plans to use about $250 million to terminate a complicated swaps deal related to previous bonds issued to finance pension debt, said Bill Nowling, press secretary for Detroit’s state-appointed emergency manager, Kevyn Orr.
About $100 million would “provide the city with adequate liquidity throughout the restructuring case to start reinvesting in Detroit today,” Nowling said in an e-mail to Reuters. It would be a line of credit the city could draw from, but it may not use all of it, he said.
Nowling also said Orr plans to use proceeds from the financing to invest in “quality of life” improvements for Detroit’s nearly 700,000 residents.
It’s like the old joke:
Patient: Doctor, it hurts when I do this.
Doctor: Then stop doing that.
Lacking in any serious discussion (outside of right-of-center blogs, that is) about resurrecting this once glorious city is that it was a one party rule affair that led to it’s implosion. Any institution that lends it money will hopefully have a big people’s conversation with officials about not running right back to the status quo.
Hopefully.
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