DETROIT (CN) - Settling the largest bankruptcy filing in U.S. history, a federal judge has approved a plan that will cut more than $7 billion in debt from the beleaguered city of Detroit.
The city will retain its prized collection from the Detroit Institute of Arts and begin to restructure services and utilities that have been severely lacking for generations.
As part of what was termed a "Grand Bargain," all city creditors approved a plan that pours more than $800 million from private foundations as well as state tax dollars into the city pension fund over the next two decades.
Pensioners will receive a 4.5 percent cut to monthly checks and lose annual cost-of-living adjustments, in addition to reductions for police and fire cost-of-living increases.
Judge Steven Rhodes praised the city's decision to reject a group of creditors that advocated the sale of its art collection to cure the debt.
"To sell the DIA art would be to forfeit Detroit's future," Rhodes said.
The actual filing will not take place for two weeks unless the court approves the city's waiver request of the 14-day appeals period.
Emergency Manager Kevin Orr's time in Detroit comes to a close after 18 months, but the city will still have to answer to a Financial Review Commission that will oversee finances for the next decade in an effort to appease creditors that worry the city could slip back to insolvency.
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