As the City of Detroit veers closer to Chapter 9 bankruptcy, and news reports suggest that creditors will be offered pennies on the dollar by the EM, the recent experience in Jefferson County (AL) may be a template for Detroit. Bloomberg News reported earlier this week (here) on a deal between Jefferson County and its creditors, most of whom held sewer system debt, to recover approximately $0.60 on the dollar.
Compared to the $0.10 on the dollar being floated in Detroit, Jefferson County creditors might have made a good deal. Or maybe the figures being floated in Detroit are designed to soften up bond holders for what promises to be a difficult negotiation process.
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