FINACIAL TIMES: Detroit said it would default on a payment due to creditors on Friday, setting the stage for last-ditch talks to avert the largest municipal bankruptcy in US history and push through a financial restructuring plan that would cut benefits to workers and payments to some bondholders…
“Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin,” Mr Orr said. Local media reported that some unsecured creditors were offered less than 10 cents on the dollar.
He said the city would not pay the $39.7m due on Friday to holders of pension-related certificates of participation. These were among the bonds downgraded on Thursday by Moody’s, which gave them a credit rating of Caa3, the agency’s third-lowest rating. Caa3 means the agency views the bonds as poor and subject to high credit risk… (more)
EDITOR: Instead of trying to fleece the Lancaster County Solid Waste Management Authority and the Lancaster citizenry to pay off Harrisburg creditors, Gov. Tom Corbett should allow the federal bankruptcy court to resolve matters. If the Lancaster authority is to acquire the Harrisburg incinerator, it likely will then be at its true market value – $45 million, not the preposterous $150 million that the Lancaster Authority’s president Jim Warner told his board it will cost them.
Of course then the creditors will take a big loss and won’t be in a mood to make giant political contribution to Corbett’s election campaign.
And let’s hope Warner will show the common sense not to acquire the environmentally challenged ‘mountains’ of ash dating pack over forty years.
Incidentally, Moody also downgraded the Lancaster Waste Authorty’s bond rating when they learned the price it was offering for the trouble plagued Harrisburg ncinerator.
