Oct 11 (Reuters) – Barclays Plc will provide cash-strapped Detroit with up to $350 million in debtor-in-possession financing in the wake of its municipal bankruptcy filing in July, Detroit’s top official said on Friday. Detroit will use the money for infrastructure investments and to terminate interest-rate swap agreements that were not advantageous for the city, said Kevyn Orr, the city’s state-appointed emergency manager. Detroit is the first large U.S. city to seek so-called debtor-in-possession (DIP) financing after filing for Chapter 9 municipal bankruptcy on July 18. The city said it plans to ask for a November hearing on the financing, which is subject to federal bankruptcy court approval. Detroit, with at least $18 billion of debt and obligations, is the largest U.S. city to ever have filed for bankruptcy. About $230 million of the financing’s proceeds will be used to end swap contracts the city entered into with Bank of America Corp’s Merrill Lynch Capital Services and UBS AG in conjunction with debt sold for Detroit’s public pension funds. Bill Nowling, Orr’s spokesman, said the DIP financing was needed for the city to execute the swap termination deal with Merrill Lynch and UBS that Detroit asked the bankruptcy court to approve over the objection of bond insurers, some bondholders, the pension funds and others. He said court mediation with bond and swap insurer Syncora Guarantee Inc, the main objector, was continuing. Without the deal, terminating the swaps could cost an additional $60 million.
The city would use the rest of the proceeds from the DIP financing – about $120 million – to improve public safety and other basic services, remove blighted properties and boost technology infrastructure, Orr said. Detroit has seen its population shrink to about 700,000 from 1.8 million in the 1950s, when Detroit’s three automakers dominated the industry. In recent years, the city has made international headlines with its urban blight, roaming packs of feral dogs and outdated and sometimes inoperable police and fire equipment. The financing will be secured with a pledge of Detroit’s income tax and casino tax revenue and if those funds are not sufficient, “net cash proceeds from any potential monetization of city assets that exceeds $10 million,” according to the statement. Nowling said while the deal with Barclays doesn’t specify particular city assets, anything that could be potentially monetized, including assets at the Detroit Institute of Arts, is on the table. “We haven’t made a decision about selling anything,” he said. Barclays will have priority over certain claims – all administrative expense, post-petition and pre-petition unsecured claims. Orr has deemed $11.9 billion owed by the city to its pension funds, bondholders, retirees and others to be unsecured debt. The financing will carry the London Interbank Offered Rate (LIBOR) plus 2.5 percent, subject to market fluctuations, and will have an outside maturity date of 30 months from the closing date. The city chose Barclays in a competitive process conducted over the past month that resulted in 16 proposals from financial institutions, Orr’s statement said. Barclays’ proposal was deemed “the most advantageous based on structure and pricing,” it added. Detroit heads to a trial later this month to prove it is eligible for bankruptcy.
California State CAFR Examined, Fraud Discovered, Heads Roll by Walter Burien (August 1, 2012)
BREAKING NEWS: California State CAFR looked at; Fraud identified; Heads Roll
First Domino to fall:
It appears someone did a little digging into the CA State CAFR report.
It is not said in the Los Angeles Times News Article but it would be my estimate that the funds identified were sitting in a designated advance liability account. Now it is time to turn the same rocks over for all cities; county; state; enterprise; school district; and state university accounts.
For the CA State Parks it was 54-million. Collectively for all local government operations (tens of thousands of operations) it is a few trillion.
The department head resigned and the assistant fired. What cojones did they forget, or intentionally ignore to cut off? The state attorney who dotted the “I’s” and crossed the “T’s” setting up the hidden funding account for them in the first place (Emphasis added)
Every one of these stash accounts is signed off on by the city; county; or state attorney.. The true fraud begins there, and usually the same is checked off on by a local judge. (Again; Emphasis added) Attorneys running the show, the employee(s) following their instructions but then the employee getting the axe as the scape goat.
Per these types of situations: If “true” accountability came to play: Black robes and their cooperative suited shill attorneys should be forced to dress in orange jump suits and locked in an eight by ten cell for a very long time.
Have your local Sheriff investigate and arrest the true responsible party for the fraud involved in these matters. The attorneys and judges who structured and then signed off on it all.
Please share with all that you know, re-post, blog, and website post.
Sent FYI from,
Walter Burien – CAFR1
P. O. Box 2112
Saint Johns, AZ 85936
Tel. (928) 458-5854
From: Los Angeles Times
Sent: Friday, July 20, 2012 12:40 PM
Subject: Breaking: State parks had $54-million hidden surplus, officials say
State parks had $54-million hidden surplus, officials say
Los Angeles Times | July 20, 2012 | 0:22 PM
California’s state parks system secretly stashed away $54 million even as it was cutting services and threatening to close parks, officials announced today. The department’s director, Ruth Coleman, resigned, and her second in command was fired as the hidden surplus was revealed. The state attorney general’s office is conducting an investigation.
The announcement means the department has plenty of cash, even though it has been soliciting hundreds of thousands of dollars in donations in what was thought to be a desperate scramble to keep parks open.
Officials from the agency that oversees the parks department said the department has under-reported tens of millions of dollars for the last 12 years.
For the full story and latest information go to http://www.latimes.com/news/local/la-me-state-parks-20120721,0,3462998.story