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Detroit avoids cash crunch as judge halts lawsuit
Source: Reuters
Detroit avoids cash crunch as judge halts lawsuit
By Karen Pierog
DETROIT | Wed Jun 13, 2012 7:05pm EDT
(Reuters) - Detroit averted a financial meltdown after a Michigan judge on Wednesday dismissed a lawsuit that would have left the city without money it needs to make a key debt payment in two days.
Mayor Dave Bing called the episode, which threatened to cut off the city from state funds, an "unfortunate distraction". He said Detroit will be able to make a $34.2 million payment on its pension debt on Friday. Fears of an impending cash crunch had led to a cut in the city's credit ratings.
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In a tight 5 to 4 vote the city council in April approved a deal giving the state of Michigan greater control over Detroit's troubled finances while sidestepping a potential takeover by the state.
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Detroit had faced a state funding cut-off after its top lawyer, Krystal Crittendon, earlier this month filed a lawsuit claiming that the financial stability agreement with the state was invalid because Michigan owes more than $230 million to Detroit and was in default to the city.
[font size=1]-snip-[/font]
By Karen Pierog
DETROIT | Wed Jun 13, 2012 7:05pm EDT
(Reuters) - Detroit averted a financial meltdown after a Michigan judge on Wednesday dismissed a lawsuit that would have left the city without money it needs to make a key debt payment in two days.
Mayor Dave Bing called the episode, which threatened to cut off the city from state funds, an "unfortunate distraction". He said Detroit will be able to make a $34.2 million payment on its pension debt on Friday. Fears of an impending cash crunch had led to a cut in the city's credit ratings.
[font size=1]-snip-[/font]
In a tight 5 to 4 vote the city council in April approved a deal giving the state of Michigan greater control over Detroit's troubled finances while sidestepping a potential takeover by the state.
[font size=1]-snip-[/font]
Detroit had faced a state funding cut-off after its top lawyer, Krystal Crittendon, earlier this month filed a lawsuit claiming that the financial stability agreement with the state was invalid because Michigan owes more than $230 million to Detroit and was in default to the city.
[font size=1]-snip-[/font]
Read more: http://www.reuters.com/article/2012/06/13/us-detroit-lawsuit-idUSBRE85C1RE20120613
