Detroit reaches deal with 2 banks to pay off debt - FOX 10 News |

Detroit reaches deal with 2 banks to pay off debt

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(WJBK) -

Bankrupt Detroit has reached a new deal with two banks to settle millions of dollars in debt tied to an interest rate swap deal.

Fox 2's legal analyst Charlie Langton breaks down the deal as this:
1) The city borrows $285M from Barclays Bank, not $350M
2) City pays $165M to settle claims against all banks and creditors
3) City spends $120M for city services
4) City saves $128M

It still has to be approved by a bankruptcy judge who ordered the city to seek a better deal with the banks.

Detroit pledged casino tax revenue in 2009 as collateral to avoid defaulting on past pension debt payments. The swaps allowed Detroit to get fixed interest rates on pension bonds with UBS and Bank of America.

VIDEO: Charlie Langton breaks down the deal further and explains what it could mean for pensioners

Orr also says the city also has agreed to lower a financing loan to pay off the bank.

-The Associated Press contributed to this report

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