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A judge overseeing Detroit’s bankruptcy again has rejected a deal to get the city out of a disastrous financial agreement with major banks.
Judge Steven Rhodes today turned down a more than $165 million compromise, saying “it’s just too much money.” He had rejected a $230 million deal in December.
The agreement is considered a key step as the city comes up with a sweeping plan to exit bankruptcy.
In 2009, Detroit pledged a critical revenue source, casino taxes, as collateral to avoid defaulting on pension debt payments. That agreement allowed the city to get fixed interest rates on bonds with UBS and Bank of America. But it backfired when rates dropped during the recession.
Detroit had lined up a loan to pay for the settlement.
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