By Lisa Lambert
DETROIT Fri Oct 17, 2014 3:54pm EDT
DETROIT Oct 17 (Reuters) - Closing arguments in the hearing on Detroit's landmark bankruptcy are just days away, leaving odds and ends for the city, its creditors and U.S. Bankruptcy Judge Steven Rhodes to resolve.
After closing arguments, expected on Wednesday, Rhodes will have to determine if the city's plan to adjust $18 billion in debt and obligations and exit the biggest-ever municipal bankruptcy is fair to creditors and feasible for the city to follow.
On Friday, Rhodes heard arguments on a claim from the American Federation of State, County and Municipal Employees union that the city owes its members pension money from 2011.
In the past, when Detroit's retirement systems achieved annual investment returns of more than 7.9 percent, they gave employees credits toward a special annuity account, retirees an extra pension payment known as a "13th check," and lowered the city's required contribution.
The union has said it is due damages from a city ordinance change in 2011 prohibiting 13th checks and annuity credits, but Detroit contends the grievance is not part of the bankruptcy case and that its plan of adjustment addresses legitimate pension claims.
Rhodes, who began a hearing on Detroit's plan on Sept. 2, will announce a decision on the AFSCME complaint on Monday, before another hearing on objections filed by city library and Cobo Hall convention center employees and unions.
Meanwhile, institutions holding $1 billion of Detroit pension certificates of participation (COPs) are deciding whether to opt into a proposed settlement that the insurer of the COPS, Financial Guaranty Insurance Co, reached with Detroit this week.
If the institutions do not approve the settlement, they will remain objectors to the plan and present a closing statement at the trial. In that case, they would argue the plan favors some creditors over others, according to the COPs holders' attorney, Thomas Moers Mayer, putting pressure on Rhodes' determination if the plan is fair.
A FGIC spokesman said he expected an update on the COPS vote to be announced Tuesday.
Detroit's monumental settlement with FGIC now moves to the city council for a vote on Tuesday.
(Reporting By Lisa Lambert; Editing by Steve Orlofsky)
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