Detroit Emergency Manager Kevyn Orr is halting payment to holders of the city's unsecured debt -- such as general obligation bonds -- as he attempts to win their support for a massive restructuring plan that would effectively pay off Detroit's nearly $11.5 billion in unsecured debt at less than 10 cents on the dollar.
"If we're able to restructure and get a new deal in place, then we'll start paying on that newer deal," Orr told reporters after presenting his restructuring plan to creditors Friday morning at the Detroit Metro Airport Westin Hotel.
While Orr acknowledges that there may be some room for negotiation with creditors, he says he wants to move quickly on restructuring. Orr said the city has a 50/50 chance of avoiding bankruptcy.
"If people are sincere and they look at the data that's contained in the proposal, you would think a rational person would have to step back and say this is not normal, I don't want bankruptcy, I want to make an adjustment," Orr said. "It's going to be hard. It's going to be difficult, but what choice do we have?"
In response to the new, the credit rating agency Fitch downgraded Detroit credit to a D rating -- the rock-bottom level, reserved for institutions in default.
