DETROIT (AP) -- A federal judge on Friday approved bankrupt Detroit's plan to settle a bad multi-million dollar pension debt deal with two banks.
Judge Steven Rhodes signed off on the agreement to pay $85 million to UBS and Bank of America.
"The amount is reasonable and quite fairly compromises the counter-parties' claims," the judge said of the deal in which each bank will get $42.5 million secured from casino revenue.
It will be paid off in monthly, $4.2 million installments, Rhodes said during a hearing Friday morning.
Rhodes said the plan decreases the amount Detroit owes to the banks and extends the amount of time the city has to pay what is owed. Plus, it doesn't need a loan to pay it off, he said.
Rhodes had denied earlier proposals for $220 million and $165 million settlements.
Detroit had pledged casino tax revenue in 2009 as collateral to avoid defaulting on pension debt payments, which allowed the city to get fixed interest rates on pension bonds with the banks. But the deal became too costly when interest rates plunged.
The swaps deal is key to Orr's plan to restructure Detroit's debt. The two banks have said they will support Orr's plan.
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