In re City of Detroit

Supplemental Opinion Regarding Plan Conñrmation, Approving Settlements, and Approving Exit Financing

STEVEN W. RHODES, Bankruptcy Judge.

Table of Contents

I. Introduction.159

II. The Plan CONFIRMATION Prooess. i — 1 ZD i — I

A. The City’s Plans of Adjustment. i — 1 ZD t — i

B. An Overview of the City’s Eighth Amended Plan of Adjustment (Ml *D rH

C. Objections Filed by Represented Parties. CO ZD t — l

D. The Participation by Unrepresented Parties. hO *D rH

E. The City Tour.. <D ZD i — i

1. The Unrepresented Parties’ Oral Presentations. TO ZD rH

2. The Unrepresented Parties’ Participation in the Confirmation Hearing ZD ZD i — 1

III. The Settlements in the Plan.167

A. Mediation.167

B. The Applicable Law.168 C. The Bard Considerations Applicable to All of the Settlements.169 D. The Grand Bargain.169 E. The State Contribution Agreement.170

1. The Potential Claim Against the State of Michigan.170 2. The Terms of the State Contribution Agreement.170

3. The State Contribution Agreement Is Fair and Equitable ..171

a. The State Contribution Agreement Is Reasonable in Amount.171

b. The Releases in the State Contribution Agreement Are Reasonable.172

F. The DIA Settlement.176

1. The Dispute over the DIA Art.176

2. The Terms of the DIA Settlement.176

3. The DIA Settlement Is Fair and Equitable.177

G. The Pension Global Settlement...179

1. The Terms of the Pension Global Settlement.179

a. The Treatment of Pension Claims.179

b. Restoration of Pension Benefits.180

c. Governance and Oversight.180

*157 2.The Pension Global Settlement Is Fair and Equitable.180

The Annuity Savings Fund Recoupment Settlement.182 w

1. The Dispute Over the Excess ASF Credits.182

2. The Terms of the ASF Settlement.182

3. Objections to the ASF Settlement.182

4. The ASF Settlement Is Fair and Equitable, and Does Not Violate the Bankruptcy Code.183

The OPEB Settlement .184

1. The Disputes Over the OPEB Claims.184

2. The Terms of the OPEB Settlement.185

3. The OPEB Settlement Is Fair and Equitable.186

The 36th District Court Settlement.186

The UTGO Settlement.187

1. The Dispute Regarding the UTGO Bonds.188

2. The Terms of the UTGO Settlement.188

3. The UTGO Settlement Is Fair and Equitable.189

The LTGO Settlement.■.190

1. The Dispute Regarding the LTGO Bonds .190

2. The Terms of the LTGO Settlement.191

3. The LTGO Settlement Is Fair and Equitable.191

The Settlements Related to the Certificates of Participation.'.. 192

1. The Dispute Relating to the COPs Transactions.192

2. The Terms of the COPs Settlement.193

3. The Terms of the Syneora Global Settlement.194

4. The Syneora Global Settlement Is Fair and Equitable.195

5. The Terms of the FGIC Global Settlement.196

6. The FGIC Global Settlement Is Fair and Equitable .197

IV. Settlements That the CouRt Approved During the Case.197

A. The Swaps Settlement.197

B. The DWSD Bondholders Settlement.198

C. The MIDDD Settlement.198

V. The Creation of the Great Laxes WateR Authority.198

VI.The Classes of Claims in the City’s Plan and the Results of the Balloting.199

VII.The Statutory Requirements for Chapter 9 Plan Confirmation .200

VIII.The Court’s Findings Regarding Confirmation of the City’s Eighth Amended Plan of Adjustment.202

IX. The Outstanding Objections to the City’s Plan to o CO

A. Objections Filed by Represented Parties_ to o CO

B. Objections Filed by Unrepresented Parties . to o CO

X. Issues Relating to Plan Confirmation. §

A. The City’s Professional Fees Will Be Fully Disclosed and Reviewed for Reasonableness As Soon As Practicable, As Required by § 943(b)(3). to o

1. The City’s Professional Fees Will Be Fully Disclosed. to o

943(b)(3) Requires the Court to Determine Whether the City’s Professional Fees in the Case Are Reasonable . to o ci

a. The Scope of § 943(b)(3). to o

b. Deferring to the Fee Examiner’s Determination of Reasonableness in This Case Is Insufficient to Comply with § 943(b)(3) and City of Avon Park. O 7 — < <M

c. The Process for Reviewing Fees . T-Í T-l <M

*158 The Debtor Is Not Prohibited by Law from Taking Any Action Necessary to Carry Out the Plan, As Required by § 943(b)(4).211

The Plan Is in the Best Interests of Creditors, As Required by 8 Q43fhY7! ...212 !

The Applicable Law <M T*H <M

If the Case Were Dismissed, State Law Remedies Would Not Provide Creditors with a Better Result Than the Plan. CO l-ri

a. The Creditors’ Legal Remedies in the Event of a Dismissal CO T — i

b. The Creditors’ Recoveries in the Event of a Dismissal. lO T-ri

c. The Creditors’ Loss of Other Plan Benefits. Cr — (

The Creditors Can Access No Other Assets in This Bankruptcy CO H 00

4. The Best Interests of Creditors and Feasibility , to H CD

The Plan Is Feasible, As Required by § 943(b)(7) 108 to M CD

1. Applicable Law. to M CO

2. An Overview of Feasibility. to W O

3. Evidentiary Issues Regarding the Report and Testimony of the Court’s Feasibility Expert.

4. The Expert’s Standard for Feasibility .

5. The City’s Plan Is Feasible..■.

6. The City’s Revenue and Expense Projections.

a. The City’s Ten-Year Revenue Projections.

b. The City’s Ten-Year Expense Projections.

c. The City’s Forty-Year Revenue Projections.

d. The City’s Forty-Year Expense Projections.

e. The Resulting Forty-Year Projections.

f. The Expert’s Review of the Plan Projections.

g. The Revenue in the Plan Projections.

h. The Expenditures, Revenue and Cost Savings Associated with the RRIs. to to OO

7. The City’s Obligations to Creditors Under the Plan. CO CO OO

a. The City’s Post-Bankruptcy Debt. to CO CO

b. The Cost of Servicing the Post-Bankruptcy Debt. to to O

c. The City Will Be Able to Service Its Post-Bankruptcy Debt to CO O

8. The Feasibility of the City’s Plan to Address Its Pension Obligations. CO CO h- 1

a. The City’s Plan Regarding Its Pension Obligations . CO CO H- 1

b. Evaluating the Risks in the City’s Plan to Address Its Pension Obligations .’. CO CO

c. Recommendations for Enhanced Disclosures to Reduce the Risk of Unmanageable Pension Obligations.

9. The City Will Be Able to Sustainably Provide Adequate Services

a. The Blight Initiatives.

b. The Public Safety Initiatives.

c. The Organizational Efficiency Initiatives.

d. The Resident Services Initiatives.

e. The Business Services Initiatives.

10. The City’s Commitment to Implement the Plan.

11. Final Thoughts and Recommendations on Feasibility.

Each of the Claims in Each Class Is Substantially Similar to the Other Claims in the Class, As Required by § 1122(a). CO ^ CR

1. The Applicable Law. CO ^ cn

2. Creditors’ Objections to Classification Are Overruled. CO ^ Gi

The City Proposed the Plan in Good Faith, As Required by CO 4^ <1

The J-i

The Good CO

The CO

Federalism Considerations in the Court’s 4*.

*159 251 The City Has Complied with the Applicable Provisions of the Bankruptcy Code, As Required by § 1129(a)(2). G.

252 Interest Rate Disclosure Issue.

253 2. Successive Plan Modifications Did Not Require Re-Solicitation of Ballots.

253 The Plan Does Not Discriminate Unfairly Against Dissenting Classes 14 and 15, As Required by § 1129(b)(1). H.

253 1. The Plan Discriminates Against Dissenting Classes 14 and 15...

255 2. The Unfair Discrimination Standard.

257 3. The Discrimination Against the Classes of General Unsecured Creditors and Convenience Creditors Is Not Unfair.

257 a. The Discrimination in Favor of the Pension Classes Is Not Unfair.

258 b. The Discrimination in Favor of the UTGO, LTGO and 36th District Court Classes Is Not Unfair.

c. The Discrimination Against Classes 14 and 15 Is Not Unfair Even Though Some Creditors in Those Classes May Be Involuntary Creditors. CO C71 00

The Plan Is Fair and Equitable with Respect to the Dissenting Classes, As Required by § 1129(b)(1). I. CO or

1. The Test of “Fair and Equitable” in Chapter 9. bO 05

2. The Plan Is “Fair and Equitable”. CO 05

The Objections of the Creditors with Constitutional Claims Are Sustained in Part and Overruled in Part. J. CO 05 CO

1. The Relevant Plan Provisions. CO 05 CO

2. The § 1983 Creditors’ Objections . CO 05 CO

a. Impairing and Discharging the § 1983 Claims Against the City Does Not Violate the Fourteenth Amendment. CO 05 CO

b. The Bankruptcy Code Does Not Provide for the Discharge of § 1983 Claims Against the City’s Officers in Their Individual Capacity. CO 05 cn

c. The City Has Not Established That a Third-Party Release of § 1983 Claims Against Its Officers in Their Individual Capacity Is Essential to Its Plan. CO 05

3. The Takings Clause Creditors’ Objection. CO -3

a. Discharging Takings Clause Claims Would Violate the Fifth Amendment.•.. CO 05 00

b. The Takings Clause Claims Must Be Excepted from Discharge. CO s

The Plan Does Not Violate the Funding Clause of the Michigan K. CO o

The Pension Creditors’ Claims Are Against the City, Not the Retirement Systems .271 L.

The Pensions of DWSD and Library Employees Are Properly Included in the Plan .272 M.

The Plan Does Not Violate the Blighted Area Rehabilitation Act.273 N.

The Grand Bargain Is Not an Improper Use of Tobacco Settlement Monev.273 O.

P. The Plan Does Not Violate the Federal Transit Act.273

XI. The Exit Finanoing Pboposed in the Plan is AppRoved .275

XII. Conolusion.276

I. Introduction 1

In chapter 9 of the bankruptcy code, the federal government offers help to the *160 states in solving a problem that, under our constitutional structure, the states cannot solve by themselves. That problem is the adjustment of the debts of an insolvent municipality. In this case, this Court grants that help to the State of Michigan (the “State”) and the City of Detroit (the “City”).

On December 5, 2013, the Court entered an order for relief finding that the City was eligible to file a chapter 9 bankruptcy case under § 109(c). 2 (Dkt. # 1946) Both before and after that, nearly every creditor group filed litigation against the City seeking the full protection of its claims.

The City filed its first plan and disclosure statement on February 21, 2014. At that time, the City had no approved settlements with any of its creditors. After that, every creditor group filed objections to the City’s plan.

Since then, however, through court-ordered mediation, the City has achieved settlements with every creditor group that was represented by counsel, with one exception — creditors with claims that the City or its officers had violated their constitutional rights. Successive settlements resulted in successive plans. The settlements also resulted in the settling creditors’ support of the plan and their withdrawal of their litigation against the City and their objections to the plan.

The City now seeks confirmation of its eighth amended plan of adjustment, filed on October 22, 2014. (Dkt. # 8045)

In the context of seeking confirmation of its plan, the City also seeks approval of its several settlements with creditors under bankruptcy rule 9019:

• The Grand Bargain settlement, which includes the State Contribution Agreement, the DIA settlement and the global pension settlement;

• The OPEB settlement;

• The 36th District Court settlement;

• The UTGO settlement;

• The LTGO settlement;

• The COPs settlement, including the Syncora settlement and the FGIC settlement.

As more fully described in parts III and IV below, the Court has reviewed each settlement included in the plan and determines that each is fair and equitable, and within the range of reasonableness. Accordingly, the Court approves those settlements.

Based upon its findings in part VIII below, the Court concludes that the City’s eighth amended plan of adjustment meets the legal requirements for confirmation. Most significantly, the Court finds that:

• The plan was proposed in good faith.

• The plan is feasible.

• The plan is in the best interests of creditors.

• The Court will determine the reasonableness and disclosure of the professional fees for which the City is responsible in connection with this case.

• The City’s proposed exit financing meets the requirements of the bankruptcy code.

• The plan was accepted by all creditor classes but two — the classes of other unsecured claims and convenience claims.

• As to the two dissenting creditor classes, the plan is fair and equitable.

*161 • As to the two dissenting creditor classes, the plan does not unfairly discriminate against them.

Accordingly, the Court confirms the plan.

It does so, however, with conditions. First, for the reasons stated in part X.J.2. below, creditors’ claims against City employees in their individual capacity are neither discharged nor released. Second, for the reasons stated in part X.J.3. below, creditors’ claims against the City that are based in the Takings Clause of the Fifth Amendment of the United States Constitution are excepted from the discharge.

The Court’s confirmation of the City’s plan also comes with recommendations in parts X.D.8.C. and X.D.11. below to take specific actions to assure that what happened in Detroit never happens again.

II. The Plan Confirmation Process

A. The City’s Plans of Adjustment

The City filed ten plans of adjustment. Most of the amended plans were the result of successive creditor settlements and agreements.

The City filed its first plan and disclosure statement on February 21, 2014 (Dkt. ## 2708 and 2709), ahead of the March 1, 2014, deadline that this Court first set.

On March 31, 2014, the City filed an amended plan and disclosure statement. (Dkt. ## 3380 and 3382) This plan incorporated the Court-approved swap settlement agreement and the initial stages of the Grand Bargain, discussed in parts IV.A. and III.D., respectively.

On April 16, 2014, the City filed its second amended plan and disclosure statement. (Dkt. ##4140 and 4141) It clarified and expanded on aspects of the Grand Bargain and added the settlements relating to the restoration of benefits, the ASF recoupment and the income stabilization program, discussed in parts III.G.l.b., III.H and III.E.2, respectively. It also clarified and expanded on aspects of the OPEB settlement, discussed in part III.I. below, incorporated the UTGO settlement, discussed in part III.K. below, and introduced the concept of post-effective date oversight for the City.

On April 25, 2014, the City filed its third amended plan and disclosure statement. (Dkt. ## 4271 and 4272) This plan incorporated the parties’ agreements that clarified and expanded upon the provisions for restoration of PFRS pension benefits and other aspects of the Grand Bargain and the OPEB settlement. It also clarified the treatment of claims relating to the operation of City vehicles, tax refund claims, utility deposits and pass-through claims.

On May 5, 2014, the City filed its fourth amended plan and disclosure statement. (Dkt. ##4391 and 4392) The Court approved that disclosure statement. (Dkt. #4401) The City served solicitation packages, including this plan and disclosure statement, and plan ballots. (Dkt. ## 4421 and 6179) It also published notice of the plan and the disclosure statement in the Detroit News, the Detroit Free Press, USA Today and the Wall Street Journal. (Dkt. ##6209,. 6211 and 6253) This amended plan incorporated the final aspects of the Grand Bargain, including final agreements relating to restoration of pension benefits and pension plan governance, as well as the OPEB settlement. 3

*162 On July 25, 2014, the City filed a fifth amended plan. (Dkt. # 6257) This plan incorporated the LTGO settlement, discussed in part III.L. below, and the 36th District Court settlement, discussed in part III.J. below. It also added the cash payment option for the ASF recoupment settlement, and specified the composition of the two Voluntary Employee Benefit Association (“VEBA”) boards created as part of the OPEB settlement. Clarifications and changes were also made to the Grand Bargain and the UTGO settlement.

On July 29, 2014, the City filed a corrected fifth amended plan. (Dkt. # 6379) This plan removed the provisions for post-confirmation reporting to the bankruptcy court that were apparently included in the fifth amended plan by mistake.

On August 20, 2014, the City filed its sixth amended plan. (Dkt. # 6908) This plan incorporated the DWSD bondholders settlement, discussed in part IV.B below.

On September 16, 2014, the City filed its seventh amended plan. (Dkt. # 7502) This plan incorporated the Syncora global settlement and set forth the treatment of COPs claims in class 9, discussed in part III.M. below. It also incorporated agreements with the retiree committee and the LTGO parties regarding the residual interests in the COP claims reserve. It also reflected the closing and completion of the DWSD bond tender offer and further specified how the two VEBA boards would be comprised. It also provided for the prepayment to creditors in classes 7, 12 and 14 of the October 2015 interest payment on the Excess New B Notes.

On October 22, 2014, the City filed its eighth and last amended plan. (Dkt. # 8045) This final plan reflects the City’s settlement with FGIC, its last objecting financial creditor, discussed in part III.M. below. It also reflects the settlement with the UAW and AFSCME regarding the treatment of retirees of the Detroit Public Library and the Detroit Regional Convention Facility Authority.

For the reasons discussed in part X.G.2. below, the Court concluded that the plans' that the City filed after the fourth amended plan did not require new balloting and therefore did not require a new disclosure statement.

B. An Overview of the City’s Eighth Amended Plan of Adjustment

The plan that the City ultimately requested this Court to confirm contemplates a complete restructuring of the' City’s debt. The City has settled with every major creditor group. Because of the plan, the City has eliminated approximately $7 billion in liabilities. Trial Tr. 70:4-7, Sept. 30, 2014. (Dkt. # 7821) Upon exiting bankruptcy, the City will issue “New B Notes” in the aggregate face amount of $632 million and “New C Notes” in the aggregate face amount of $88 million. These new notes will be used to *163 restructure the City’s obligations for post-retirement health benefits, debt service on several types of bonds and other unsecured liabilities. Ex. 791. The City has also restructured its unlimited tax general obligation bonds at a significant savings and will use exit financing to retire many of its limited tax general obligation bonds. Ex. 791. In addition, the settlements with FGIC, the City’s largest creditor, and Syn-cora include real estate development agreements that give these creditors vested stakes in the City’s recovery.

The plan also contemplates post-bankruptcy financial oversight of the City to ensure that the fiscal exigencies that resulted in the City’s chapter 9 bankruptcy never happen again. The state legislation that implemented the Grand Bargain created a financial review commission to review the City’s finances and budgets to ensure that the City adheres to the plan and continues to implement needed financial and operational reforms. Mich. Comp. Laws § 141.1631 et seq. The GRS and PFRS are also required to create investment committees whose role will be to make recommendations to, and approve certain actions by, the respective system’s board of trustees. Mich. Comp. Laws § 38 .1133g; Eighth Am. Plan of Adjustment (hereafter cited as “Plan”), Ex. LA. 332 at 2. (Dkt. # 8045)

Finally, because of the financial reforms contained in the plan, the City is able to invest approximately $1.7 billion in several reinvestment and restructuring initiatives (“RRIs”) over ten years to help improve the City government’s infrastructure and its provision of services. Ex. 579. These RRIs are designed to “substantially improve and provide adequate levels of services, as well as enhance revenue and reduce costs.” Trial Tr. 42:11-12, Sept. 5, 2014. (Dkt. #7434) The City believes these RRIs will also result in approximately $841 million in revenue savings and that they are critical to the City’s recovery after bankruptcy. Ex. 592; see also Fourth Am. Disclosure Statement (hereafter cited as “Disc. Stmt.”) at 160. (Dkt. # 4391) The RRIs will, among other things:

(a) Provide basic, essential services to City residents; (b) attract new residents and businesses to foster growth and redevelopment; (c) reduce, crime; (d) demolish blighted and dangerous properties; (e) provide functional streetlights that are aligned with the current population footprint; (f) improve information technology systems, thereby increasing efficiency and decreasing costs; and (g) otherwise set the City on a path toward a better future.

Disc. Stmt, at 10. (Dkt. # 4391)

C. Objections Filed by Represented Parties

The following represented parties objected to the plan and subsequently withdrew their objections due to settlements with the City:

• Oakland County (Dkt. ## 4627 and 6648);

• The United States (Dkt. # 4629);

• Macomb County (Dkt. ##4636, 6666 and 7039);

• U.S. Bank National Association (Dkt. ## 4647 and 6679);

• BlackRock Financial Management, Inc., Eaton Vance Management, Fidelity Management & Research Company, Franklin Advisers, Inc. and Nu-veen Asset Management (the “DWSD Bondholders”) (Dkt. ## 4650, 4671 and 6681);

• Hypothekenbank Frankfurt AG, Hy-pothekenbank Frankfurt International S.A., Erste Europaische Pfandbrief-und Kommunalkreditbank Aktienge-sellschaft in Luxemburg S.A., *164 Deutsche Bank AG, London; Dexia Crédit Local, Dexia Holdings, Inc., and FMS Wertmanagement AoR (Dkt. ##4653 and 5979);

• Wilmington Trust, N.A. (Dkt. ## 4656, 6678, 7050 and 7603);

• Berkshire Hathaway Assurance Corporation (Dkt. ## 4657 and 6680);

• Financial Guaranty Insurance Company (“FGIC”) (Dkt. ## 4660, 6674 and 7611);

• Wayne County (Dkt. # 4663);

• National Public Finance Guarantee Corporation (“NPFG”) (Dkt. ## 4665 and 6687);

• Merrill Lynch Capital Services, Inc. and UBS AG (“the Swap Counterparties”) (Dkt. # 4668);

• Assured Guaranty Municipal Corp. (Dkt. ## 4674 and 6677);

• Ambac Assurance Corp. (Dkt. # 4677);

• Syncora Capital Assurance Inc. and Syncora Guarantee Inc. (“Syncora”) (Dkt. ##4679, 6651, 7041 and 7213);

• BlackRock Financial Management, Inc. (Dkt. # 4681);

• The Detroit Police Officers Association (Dkt. ##4901 and 4938);

• The Detroit Fire Fighters Association (Dkt. # 4918);

• The UAW (Dkt. # 6464);

• AFSCME Council 25 (Dkt. ##6466, 6468 and 7063);

• BlueMountain Capital Management, LLC (Dkt. # 6506);

• The Detroit Retirement Systems (Dkt. ## 6659, 6676, 6762 and 7052);

• FGIC, Dexia Crédit Local and Dexia Holdings, Inc., Panning Capital Management, LP, Monarch Alternative Capital LP, Bronze Gable, L.L.C., Aurelius Capital Management, LP, Stone Lion Capital Partners L.P., BlueM-ountain Capital Management, LLC, and Deutsche Bank AG, London (“the COPs Holders”) (Dkt. ##7046 and 7615); and

• The Macomb Intercept or Drain Drainage District (Dkt. # 7612).

The objecting parties who were represented by attorneys and who have maintained their objections include:

• Ben McKenzie, Jr. (Dkt. # 3230);

• T & T Management, Inc., HRT Enterprises, and the John W. and Vivian M. Denis Trust (Dkt. # 3412);

• Hyde Park Cooperative (Dkt. # 3497);

• The Housing Is a Human Rights Coalition (Dkt. # 3511);

• Deborah Ryan, Walter Swift, Cristobal Mendoza and Annica Cuppetelli (Dkt. ## 4099, 4608 and 5690);

• Dwayne Provienee, Richard Mack, and Gerald and Aleda Wilcox (Dkt. ##4224, 4226, 4228, 6764 and 6900);

• David Sole (Dkt. #4318);

• John Cato (Dkt. # 4376);

• Carlton Carter, Bobby Jones, Roderick Holley and Richard T. Weatherly (Dkt. # 4625);

• Robert Cole (Dkt. ## 4930 and 4950);

• the Ochadleus parties 4 (Dkt. ## 5788, 5964, 6642, 6671, 6995 and 7523);

*165 • the Section ' 1983 Plaintiffs 5 (Dkt. #6911); and

• Johnathan Brown (Dkt. # 8170).

D. The Participation by Unrepresented Parties

Unrepresented creditors filed 1159 objections to confirmation of the City’s plan. Of these, 836 were timely filed. The Court permitted some of these parties to participate in. the confirmation process through oral argument before the confirmation hearing commenced, and by presenting evidence and questioning witnesses during the confirmation hearing.

1. The Unrepresented Parties’ Oral Presentations

After reviewing all of the filed objections, the Court invited 79 individuals, constituting a cross-section of the objecting parties and their objections, to state and argue their objections at a hearing on July 15, 2014.

At the hearing, 46 of these 79 objectors appeared before the Court. They are: Dempsey Addison, Hassan Aleem, Audry Bellamy, Harold Franklin Bryant, Thomas Cattron, Gisele Caver, Ronald Clegg, Jo Ann Cooper, Rita Dickerson, Jamie Fields, Fabris Fiorenzo, Jesse Florence, Sr., Gerald Galazka, Deborah Graham, Andrea Hackett, Kristen A. Hamel, Patricia Beam-on, Cynthia Haskin, Beverly Holman, Irma Industrious, Felicia Jones, Gerald Kent, Richard C. Lewandowski, David L. Mal-halab, Cecily McClellan, Mashuk Meah, Amru Meah, Constance Phillips, H. Jean Powell, Roger D. Rice, Reñía C. Session, Mark L. Smith, Michael Smith, Elaine Thayer, Marie Lynette Thornton, Jean Yortkamp, Mary Jo Vortkamp, Shirley J. Walker, William Curtis Walton, Beverly A. *166 Welch, Paul C. Wells, Carl Williams, Yvonne Williams-Jones, Laura Wilson, Steven Wojtowicz, and Lucinda Darrah. See generally Trial Tr. July 15, 2014. (Dkt. # 6141)

The objectors were each given five minutes to address the Court. These parties were uniformly articulate, thoughtful, sincere, well prepared and appreciative. Most focused on the City’s proposal to reduce pension benefits and the ASF re-coupment settlement, and the impact that these proposals would have on them. They told stories of the real hardship that the plan will cause them and their families. Some still object to the filing of the bankruptcy and blame the City’s problems on State leadership.

2. The Unrepresented Parties’ Participation in the Confirmation Hearing

The Court also invited unrepresented parties to file motions requesting to participate in the confirmation hearing. The Court required each motion to state: (a) the names of the witnesses sought to be questioned or presented; (b) the subject matter of the proposed testimony; (c) the expected duration of the testimony; (d) an explanation of why the proposed evidence would not be duplicative of other evidence; and (e) a list of the exhibits to be offered into evidence during the proposed testimony. (Dkt. #6584)

Parties filed 36 such motions. Upon its review of each motion, the Court allowed seven parties to testify: Fredia M. Butler, Elaine E. Thayer, Estella L. Ball, Walter Gary Knall, JoAnn Watson, Wanda Jan Hill, and Steven Wojtowicz.

The Court permitted Michael J. Karwo-ski and John P. Quinn, attorneys and retirees from the City’s law department, to participate fully in the confirmation hearing within a certain time limit.

The Court also permitted Jamie Fields to cross-examine Charles Moore; Estella L. Ball to examine Kevyn Orr; Thomas Cattron to submit documents; Wanda Jan Hill to examine Kevyn Orr and Heather Lennox; and Yvonne Williams Jones and Cecily McClellan, jointly, to examine David T. Kausch. The Court also granted the motions to participate filed by Irma Industrious, Frenchie Williamson and Gloria C. Williams, but they did not appear at the hearing.

E. The City Tour

On June 6, 2014, the City filed a motion for a site visit by the Court. (Dkt. # 5250) The motion argued:

In order to be able to put into context the evidence that it will hear, the Court needs to experience what the witnesses will describe. Witnesses will testify about the planned reinvestment in the City of $1.4 billion over the next ten years, in areas ranging from blight remediation and public safety to transportation, recreation and public works— but in the courtroom, these are mere abstractions. To give meaning to the testimony, the Court must see what this reinvestment means for the people of Detroit.

For example, the Court will hear ample testimony, about the problem of blight in the City. But no amount of testimony or even photographs can fully express the devastating impact that blight has had on Detroit’s neighborhoods, or convey to the Court what it is like for Detroit residents to have to walk down half-empty streets of burnt-out buildings and abandoned dumping-ground lots. Without that context, the City’s plan to spend $440 million on blight remediation has little meaning.

Id. at 3-4 .

Over the objections of several creditors, the Court granted the motion and partiei- *167 pated in a tour of the City just before the commencement of the evidentiary hearing on confirmation. (Dkt. # 5629) In addition to counsel for the City, the Court also permitted participation by two representative attorneys for objecting creditors. The tour was video recorded and a stenographic record was made of the verbal descriptions that the City’s attorney provided during the tour. Notice of Filing R. of Site Visit, Ex. A and B. (Dkt. # 8673) The tour covered 59 miles in the City through many neighborhoods, both well maintained and blighted. It included the police department’s combined 5th/9th precinct and ended at the Detroit Institute of Arts (the “DIA”).

The primary impression that remains with the Court following the tour is that blight in Detroit is extensive. The statistics do not fully convey its extent or impact. In neighborhood after neighborhood, short and long stretches of streets have abandoned structures — they can no longer be called homes — that are intimidating hulks. Some are partially or mostly burned out. Some have gaping holes in their roofs or collapsed garages. Many have missing doors and windows, and broken front steps and porches. Some are strewn with illegal dumping. All are vivid statements of their former owners’ emotional and financial struggles, and of community loss.

These streets also have vacant lots, or collections of vacant lots, on which unman-aged and unsightly vegetation has taken over from the structures after their removal. On the commercial streets, block after block of abandoned, boarded up and graffiti-littered strip shopping centers far outnumbered the occasional small businesses that have survived.

It is heartbreaking, maddening and sad. No one should have to endure, day in and day out, the damage to the human spirit that can result from living in those surroundings. City residents who live, work and play in these neighborhoods deserve better. Detroit deserves better.

The precinct building is past its useful life by years, or perhaps decades, and shows obvious signs of long-term inadequate maintenance. The interior is dilapidated and its layout is ill suited to the needs of a modern, efficient and effective police precinct. The brick fagade over the front door was loose and in danger of falling, so that a scaffold is necessary to protect against injury. No expert is required to find that the building should be torn down and replaced. 6

The Court also witnessed, however, many signs of hope and determination among the residents of these neighborhoods — new residential construction, gardens, parks and outdoor art where the City has removed blight. There were also historic neighborhoods that are beautiful and remarkable in their preservation.

And then there is the DIA. For present purposes, it is enough to observe that the tour demonstrated for the Court that the DIA is a critical and immeasurable sign of great hope and determination in the City. In part X.C.3. below, the Court addresses why preserving the DIA is essential to the City’s future.

It was ■ an enlightening and valuable tour.

III. The Settlements in the Plan

A. Mediation

As the Court was hearing evidence and considering the parties’ objections, another *168 process that was fundamental to the City’s plan and its revitalization was unfolding. On August 13, 2013, the Court appointed Chief United States District Judge Gerald Rosen to be the mediator in the case. (Dkt. #322) Chief Judge Rosen then appointed a team of mediators — District Judge Victoria Roberts, District Judge Sean Cox, District Judge Wiley Daniel, Bankruptcy Judge Elizabeth Perris, and attorney Eugene Driker — to assist in the mediations. Over the next fourteen months, Chief Judge Rosen and his team worked tirelessly and diligently in the spirit of public service to supervise settlement negotiations between the City and each of the various creditor groups.

Those efforts were fully successful. The City and its settling creditors have already placed on the record their sincere expressions of gratitude and appreciation for the skill, patience, commitment, dedication and creativity that the mediators demonstrated throughout the process. This Court now adds its thanks and appreciation to the mediators for this monumental and historic achievement.

B. The Applicable Law

In connection with its request that the Court confirm its plan, the City has requested approval of those settlements. Under bankruptcy rule 9019(a), “the court may approve a compromise or settlement.” Fed. R. Bankr. P. 9019(a). Section 1123(b)(3)(A) states that a plan may provide for “the settlement or adjustment of any claim or interest belonging to the debtor or to the estate.”

In Protective Committee for Independent Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414 , 88 S.Ct. 1157 , 20 L.Ed.2d 1 (1968), the Supreme Court addressed the importance of bankruptcy settlements and the bankruptcy court’s responsibilities in reviewing them:

Compromises are ‘a normal part of the process of reorganization.’ Case v. Los Angeles Lumber Prods. Co., 308 U.S. 106, 130 , 60 S.Ct. 1, 14 , 84 L.Ed. 110 (1939). In administering reorganization proceedings in an economical and practical manner it will often be wise to arrange the settlement of claims as to which there are substantial and reasonable doubts. At the same time, however, it is essential that every important determination in reorganization proceedings receive the ‘informed, independent judgment’ of the bankruptcy court. National Surety Co. v. Coriell, 289 U.S. 426, 436 , 53 S.Ct. 678, 682 , 77 L.Ed. 1300 (1933). The requirements of §§ 174 and 221(2) of Chapter X, 52 Stat. 891 , 897, 11 U.S.C. §§ 574 , 621(2), that plans of reorganization be both ‘fair and equitable,’ apply to compromises just as to other aspects of reorganizations. Ashbach v. Kirtley, 289 F.2d 159 (C.A. 8th Cir.1961); Conway v. Silesian-American Corp., 186 F.2d 201 (C.A. 2d Cir.1950). The fact that courts do not ordinarily scrutinize the merits of compromises involved in suits between individual litigants cannot affect the duty of a bankruptcy court to determine that a proposed compromise forming part of a reorganization plan is fair and equitable. In re Chicago Rapid Transit Co., 196 F.2d 484 (C.A. 7th Cir.1952). There can be no informed and independent judgment as to whether a proposed compromise is fair and equitable until the bankruptcy judge has apprised himself of all facts necessary for an intelligent and objective opinion of the probabilities of ultimate success should the claim be litigated. Further, the judge should form an educated estimate of the complexity, expense, and likely duration of such litigation, the possible difficulties of collecting on any judgment which might be obtained, and all other factors relevant *169 to a full and fair assessment of the wisdom of the proposed compromise. Basic to this process in every instance, of course, is the need to compare the terms of the compromise with the likely rewards of litigation.

Id. at 424-25, 88 S.Ct. 1157

In Bard v. Sicherman (In re Bard), 49 Fed.Appx. 528 (6th Cir.2002), the Sixth Circuit reflected on Protective Committee, observing:

The federal courts of appeal have in turn implemented this directive by considering:

(a) The probability of success in the litigation; (b) the difficulties, if any, to be encountered in the matter of collection; (e) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises.

Id. at 530 . The Court will apply these Bard considerations in determining whether to approve the City’s settlements with its creditors.

C. The Bard Considerations Applicable to All of the Settlements

Several factors relevant to the reasonableness of each of the settlements are common to all of them. These include the following:

• All of the creditors in these settlements filed and vigorously pursued both objections to the plan and litigation with the City to protect their claims.

• All of the creditors were highly motivated to pursue those objections and that litigation, and had the resources to do so. This would include the appellate process if necessary.

• Many of the objections and much of the litigation raised issues that were novel, legally and factually complex, and significant beyond this case.

• All of the parties were well represented and well prepared for litigation.

• For the City, litigating with creditors was incompatible with its goal of a prompt and efficient exit from bankruptcy and start to its revitalization.

• For all parties, the stakes were high. On the City’s part, even a single loss in litigation against any major creditor would seriously compromise its goals in this case.

• Each settlement was at arm’s length and hard-fought. Each required perseverance, creativity and compromise by all involved.

With these factors in mind, the Court will now examine each settlement in depth.

D. The Grand Bargain

The cornerstone of the plan is the Grand Bargain. It is a collection of settlements among a number of parties with an interest in the City’s two pension plans and in protecting the City’s art at the DIA. The parties to the Grand Bargain include:

• The City

• The State

• The Official Committee of Retirees

• The General Retirement System (“GRS”)

• The Police and Fire Retirement System (“PFRS”)

• The American Federation of State, County and Municipal Employees (“AFSCME”)

• The United Auto Workers Union

• The Detroit Retired City Employees Association

• The Retired Detroit Police Members Association

*170 • The Retired Detroit Police & Fire Fighters Association

• The Detroit Police Lieutenants and Sergeants Association

• The Detroit Police Command Officers Association

• The Detroit Police Officers Association

• The Detroit Fire Fighters Association

• A number of charitable foundations, including the Ford Foundation, the Kresge Foundation, the W.K. Kellogg Foundation, the Knight Foundation, the William Davidson Foundation, the Community Foundation for Southeastern Michigan, the Fred A. and Barbara M. Erb Family Foundation, the Hudson-Webber Foundation, the Charles Stewart Mott Foundation, the McGregor Foundation, the Max -M. and Marjorie S. Fisher Foundation and the A. Paul and Carol C. Schaap Foundation

• The DIA.

The settlements represented in the Grand Bargain are the State Contribution Agreement, the DIA settlement, and the pension settlement. The Court addresses each of these settlements below. The plan reflects the Grand Bargain in its treatment of class 10, which consists of the PFRS pension claims, and class 11, which consists of the GRS pension claims.

E. The State Contribution Agreement

The City has asserted that the GRS and the PFRS have substantial unfunded actuarial accrued liabilities (“UAAL”) and that its obligation to reduce the UAAL was one of the reasons that it filed bankruptcy.

1. The Potential Claim Against the State of Michigan

It has been suggested that because pensions are protected by the Michigan constitution, the State may be obligated to pay all or a portion of the UAAL. Article IX, § 24 of the Michigan constitution provides:

The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.

Financial benefits arising on account of service rendered in each fiscal year shall be funded during that year and such funding shall not be used for financing unfunded accrued liabilities.

Some argue that this language can be read to require the State to assume the responsibility for any underfunding of a municipal pension in Michigan. The State disputes that claim.

2. The Terms of the State Contribution Agreement

In settlement of the State’s potential liability for the GRS and PFRS underfunding and in support of the City’s plan, the City, the State, the GRS and the PFRS have agreed to enter into the State Contribution Agreement.

Under the State Contribution Agreement, the State has agreed to contribute $98.8 million to the GRS and $96 million to the PFRS for a total of $194.8 million (the “State Contribution”). The City and State contend that this amount is equal to the net present value of $350 million payable over a twenty-year period at a discount rate of 6.75%. The State Contribution may only be used to fund payments to holders of GRS pension claims and PFRS pension claims.

The State Contribution Agreement requires the GRS and the PFRS to establish investment committees for the purpose of making recommendations to, and approving certain actions by, the respective system’s board of trustees under the terms and conditions set forth in the State Contribution Agreement.

*171 As part of this agreement, the City, the GRS and the PFRS will also establish an income stabilization program. The goal of this program is to ensure that pension creditors will not be forced into poverty as a result of the pension reductions in the plan. Under the income stabilization program, the State will identify all pensioners who, as of the effective date of the plan, are at least 60 years old and had a household income equal to or less than 140% of the Federal Poverty Guideline in 2013. The GRS and the PFRS will be required to make annual supplemental payments to these pensioners equal to the lesser of (a) the amount needed to restore such pensioner’s benefits to the amount received in 2013 or (b) the amount needed to bring such pensioner’s annual household income up to 130% of the 2013 Federal Poverty Guideline.

In addition, to the extent any such pensioner’s annual household income in any year is less than 105% of the Federal Poverty Guideline for that year, the City must make an additional payment to that pensioner equal to the lesser of (a) 100% restoration of pension benefits, including escalators and inflation adjustments, or (b) the amount needed to bring that pensioner’s annual household income up to 105% of the Federal Poverty Guideline for that year.

The proceeds of the Stub UTGO Bonds, described in part III.K. below, will be used to help fund the income stabilization program.

The PFRS and the GRS must keep separate recordkeeping sub-accounts for the purpose of making payments under and crediting assets to the income stabilization program, including the proceeds of the Stub UTGO Bonds. In 2022, if the investment committee of either GRS or PFRS determines that the sub-account for its system is more than fully funded to meet all future liabilities for income stabilization payments, it may recommend that the excess assets, but not more than $35 million, be used to fund the restoration of pension benefits.

In exchange for the State Contribution, the parties will cease all litigation challenging Public Act 436 (2012) or seeking enforcement of article IX, § 24 of the Michigan constitution relating to pension benefits. In addition, each holder of a pension claim, regardless of whether such holder voted in favor of the plan, must release the State and its related entities from -all liabilities arising from or related to the City, the chapter 9 case, PA 436 or article IX, § 24 of the Michigan constitution.

3. The State Contribution Agreement Is Fair and Equitable

In determining the reasonableness of this settlement, the Court must analyze two issues: (1) whether the State Contribution is reasonable in amount under the circumstances, and (2) whether the release of liabilities against the State and its related entities, who are third parties in this bankruptcy case, is necessary, appropriate and reasonable.

a. The State Contribution Agreement Is Reasonable in Amount

The claims settled by the State Contribution Agreement are not frivolous. The obligation not to impair municipal pensions established in the Michigan constitution is absolute. Moreover, the State is in a much better position than individual retirees to enforce that obligation. There is, nonetheless, no precedent for such a claim. Therefore, judging the likelihood that this claim would be successful is challenging.

If the claim were successful, the State would be responsible for the City’s pension underfunding, potentially in the neighbor *172 hood of $3 billion. The State might also then be responsible for the entire unfunded liability of every municipality in the state. Needless to say, this would be disastrous for the State. Indeed, the litigation would be high-risk for all concerned. In addition, any litigation of the claim would be lengthy, complex and expensive.

In settlement of a claim against the State valued at potentially $3 billion, the State’s contribution is $194.8 million. The many skilled and capable representatives of the pension creditors have concluded that the State Contribution Agreement is fair. They recommended it to their pension creditors, who, in turn, voted strongly to support the plan and to release their potential litigation claims, as discussed in part VI below.

In the circumstances, the Court finds that the State’s monetary contribution in the State Contribution Agreement is reasonable, although perhaps at the lowest end of the range of reasonable settlements,

b. The Releases in the State Contribution Agreement Are Reasonable

As noted, under the State Contribution Agreement and the plan, each holder of a pension claim releases the State and its related entities from all liabilities arising from or related to the City, this case, PA 436, or article IX, § 24 of the Michigan constitution. Several parties maintain their objections to these releases.

In Class Five Nevada Claimants v. Dow Corning Corp. (In re Dow Coming Corp.), 280 F.3d 648 (6th Cir.2002), the Sixth Circuit addressed the circumstances in which releases are permitted in a chapter 11 plan. 7 In that decision, the Sixth Circuit held that it is “not inconsistent with the Code” for a bankruptcy court to enjoin “a non-consenting creditor’s claim against a non-debtor.” Id. at 658. The court explained the basis for this conclusion:

[Bjankruptcy courts, “as courts of equity, have broad authority to modify creditor-debtor relationships.” United States v. Energy Resources Co., 495 U.S. 545, 549 , 110 S.Ct. 2139 , 109 L.Ed.2d 580 (1990). For example, section 105(a) of the Bankruptcy Code grants a bankruptcy court the broad authority to issue “any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” - 11 U.S.C. § 105 (a). This section grants the bankruptcy court the power to take appropriate equitable measures needed to implement other sections of the Code. See In re Granger Garage, Inc., 921 F.2d 74, 77 (6th Cir.1990).

Consistent with section 105(a)’s broad grant of authority, the Code allows bankruptcy courts considerable discretion to approve plans of reorganization. Energy Resources Co., 495 U.S. at 549 , 110 S.Ct. 2139 . Section 1123(b)(6) permits a reorganization plan to “include any ... appropriate provision not inconsistent with the applicable provisions of this title.” 11 U.S.C. § 1123 (b)(6). Thus, the bankruptcy court, as a forum for resolving large and complex mass litigations, has substantial power to reorder creditor-debtor relations needed to achieve a successful reorganization.

Id. at 656. 8

The court cautioned, however, “Because such an injunction is a dramatic measure *173 to be used cautiously, we follow those circuits that have held that enjoining a non-consenting creditor’s claim is only appropriate in ‘unusual circumstances.’ ” Id. at 658. The Court then announced the seven elements that must be met for granting a third-party release:

We hold that when the following seven factors are present, the bankruptcy court may enjoin a non-consenting creditor’s claims against a non-debtor: (1) There is an identity of interests between the debtor and the third party, usually an indemnity relationship, such that a suit against the non-debtor is, in essence, a suit against the debtor or will deplete the assets of the estate; (2) The non-debtor has contributed substantial assets to the reorganization; (3) The injunction is essential to reorganization, namely, the reorganization hinges on the debtor being free from indirect suits against parties who would have indemnity or contribution claims against the debtor; (4) The impacted class, or classes, has overwhelmingly voted to accept the plan; (5) The plan provides a mechanism to pay for all, or substantially all, of the class or classes affected by the injunction; (6) The plan provides an opportunity for those claimants who choose not to settle to recover in full and; (7) The bankruptcy court made a record of specific factual findings that support its conclusions.

Id.

Initially, the City makes the interesting-argument that Dow Coming is inapplicable in a chapter 9 case because § 901 does not' incorporate § 524(e) in chapter 9. Section 524(e) provides, “discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt.” In support, the City cites In re Connector 2000 Ass’n, Inc., 447 B.R. 752, 767 (Bankr.D.S.C.2011). The argument is based on the premise that it is the application of § 524(e) in chapter 11 cases that compels courts to be cautious about approving third-party releases.

The Court rejects this argument. Dow Coming explicitly concluded that § 524(e) is no obstacle to third-party releases:

However, this language [of § 524(e) ] explains the effect of a debtor’s discharge. It does not prohibit the release of a non-debtor. See In re Specialty Equip. Co., 3 F.3d 1043 , 1047 (7th Cir.1993) (“This language does not purport to limit or restrict the power of the bankruptcy court to otherwise grant a release to a third party.”); Republic Supply Co. v. Shoaf, 815 F.2d 1046, 1050 (5th Cir. 1987); In re A.H. Robins Co., 880 F.2d [694] at 702 [ (4th Cir.1989) ].

280 F.3d at 657.

More than that, even if the inapplicability of § 524(e) in chapter 9 did, by itself, free a chapter 9 debtor to include third-party releases in its plan, such releases would still be subject to the other requirements of confirmation, including the requirements that the plan is proposed in good faith and that the releases in the plan are fair and equitable.

Accordingly, the Court rejects the City’s argument that Dow Coming is inapplicable in this case and will consider its guidance here.

*174 Some courts have, however, tailored the seven Dow Coming elements to suit the needs of the case and have not required satisfaction of all seven factors. See, e.g., Nat’l Heritage Found., Inc. v. Highbourne Found., No. 13-1608, 2014 WL 2900933 , at *6 (4th Cir. June 27, 2014) (In denying a third-party release, the court noted, “A debtor need not demonstrate that every Dow Coming factor weighs in its favor to obtain approval of a non-debtor release. But ... a debtor must provide adequate factual support to show that the circumstances warrant such exceptional relief[.]”); In re Friedman’s, Inc., 356 B.R. 758, 761-3 (Bankr.S.D.Ga.2005) (approving a third-party release over objection without having specifically found that all seven Dow Coming factors were met).

It must be recognized that the Dow Coming holding is in the context of a chapter 11 business reorganization of a debtor beset by mass tort claims. Its direct application in a chapter 9 municipal debt adjustment case is therefore awkward and uncertain. Much debate could be had regarding which of the Dow Coming factors should apply in a chapter 9 case and whether any other factors should apply.

There is little case law applying the Dow Coming test in the chapter 9 context. However, the Court does find Connector 2000 instructive and persuasive on this matter. In that case, a “public benefit corporation,” formed to assist the South Carolina Department of Transportation (“SCDOT”) in financing and operation of transportation facilities, filed a chapter 9 bankruptcy case. The plan of adjustment included broad releases of SCDOT in consideration for “significant concessions” by SCDOT. Connector 2000, 447 B.R. at 766 .

The court found that the release of SCDOT met the Dow Coming standard. It held that the release was “an essential means of implementing the Plan; ... an integral element of the settlements and transactions incorporated into the Plan; ... fair, equitable, appropriate and reasonable; ... confers material benefits on, and is in the best interests of, the Debtor and its creditors; ... [and] is important to the overall objectives of the Plan to finally resolve all claims among or against the parties-in-interest in the case with respect to the Debtor....” Id. at 768-69 .

This Court concludes that the releases of the State and its related entities required under the State Contribution Agreement and the plan meet the Dow Coming standard as applied in Connect or 2000, and are reasonable, necessary and appropriate to implementation of the plan. The Court therefore approves them.

With regard to the Dow Coming analysis, the Court concludes:

First, there is an identity of interests between the City and the State. The City is a political arm of the State. It, like all municipalities in Michigan, was created to further the objectives of the State by providing for the health, safety and welfare of the State’s residents. The City has no sovereign powers other than those conferred on it by the State. The protection of municipal pensions in the Michigan constitution binds both.

Second, the State is contributing substantial assets to the reorganization— $194.8 million to classes 10 and 11.

Third, the release and injunction are essential to the reorganization of the City. Importantly, the Court observes that this element arises from the fundamental premise of Dow Coming — that a bankruptcy court’s power to order a third-party release is based in its “power to reorder creditor-debtor relations needed to achieve a successful reorganization.” 280 F.3d at 656 (emphasis added). As noted, the Grand Bargain, which includes the State *175 Contribution Agreement and the DIA settlement, is the cornerstone of the City’s plan. See, e.g., Trial Tr. 57:7-22, Oct. 2, 2014. (Dkt. # 7878) The release of the State is a condition precedent to the effectiveness of the State Contribution Agreement and, thus, the DIA settlement. Without these settlements, several other creditor settlements would also collapse. In addition, the approximately $816 million in outside funding provided as part of the Grand Bargain would not be available. 9 As discussed in part X.C.3. below, the DIA is essential to the City’s continuing recovery and revitalization. Without the DIA settlement, the City might not be able to ensure that the DIA art would remain in the City or that the art would be protected from future creditor recoveries.

Fourth, the impacted classes have overwhelmingly voted to accept the plan. The non-consensual releases of the State in the State Contribution Agreement and the plan apply only to the pension creditors in classes 10 and 11. These classes voted in favor of the plan by 82% and 73%, respectively. See part VI below.

Fifth, the plan provides a mechanism to pay a substantial portion of the claims in the classes affected by the release — classes 10 and 11. The contributions by the State under the State Contribution Agreement, and by the DIA and the foundations under the DIA settlement, enable classes 10 and 11 to receive their recoveries. Without these contributions, the impairment to these classes would have been much more significant. See Disc. Stmt, at 17. (Dkt. # 4391)

The sixth element of the Dow Coming test requires that the plan provide an opportunity for non-consenting creditors to recover in full. The City’s plan does not have such a provision. Accordingly, this element is not met. The City argues that this element should not apply here because the release of liabilities is a condition precedent to receiving the State Contribution and the DIA funding. Therefore, there can' be no “opt out” option for pension creditors. City’s Consol. Pretrial Br. at 143. (Dkt. # 7143) The Court concludes that it is unnecessary to determine whether this element applies here. Instead, it concludes that the other Dow Coming factors weigh so heavily in favor of approving the releases that it is appropriate to do so even if this element is not met.

Finally, regarding the seventh element,, this opinion contains the specific findings of facts supporting the Court’s conclusion that the non-consensual releases of the State and its related entities are appropriate.

Accordingly, the Court concludes that the plan meets the Dow Coming requirements for the approval of the releases that the State Contribution Agreement requires and that the plan proposes.

The Court additionally concludes that it is reasonable for the State to require these releases. Both the City and State need finality regarding the City’s pension liabilities and the City’s eligibility to file this chapter 9 case. Those are legitimate objectives in a chapter 9 case and these releases help to achieve those objectives. *176 Thus, like in Connector 2000, the releases of the State and related entities here are “an essential means of implementing the Plan; ... an integral element of the settlements and transactions incorporated into the Plan; ... fair, equitable, appropriate and reasonable; ... confers material benefits on, and [are] in the best interests of, the Debtor and its creditors; ... [and are] important to the overall objectives of the Plan to finally resolve[s] all claims among or against the parties-in-interest in the case with respect to the Debtor....” 477 B.R. at 768-69.

Consequently, under Dow Coming and Connector 2000, the Court approves the releases of the State and its related entities that are included in the State Contribution Agreement and in the plan.

The Court approves the State Contribution Agreement under bankruptcy rule 9019.

F. The DIA Settlement

1. The Dispute over the DIA Art

The second component of the Grand Bargain is the DIA settlement. One of the most contentious issues in this case has been the extent to which the bankruptcy code requires the City to sell or otherwise monetize the art at the DIA to pay creditors.

Several parties, including at times' the City itself, have taken the position that the City holds title to several significant pieces of art in the DIA and has the right to sell them outright to pay its obligations to creditors. Several other parties, including the State Attorney General and the DIA, have taken the position that the art that the City purchased or that others contributed to it is held in public trust for the citizens of the City and the State, and cannot be sold to satisfy the City’s debts.

2. The Terms of the DIA Settlement

The DIA settlement represents the full and final settlement of all disputes relating to the rights of all parties with respect to the DIA and the art.

By this settlement, the DIA pledges to secure and guaranty commitments for contributions of $100 million from individuals, local foundations and the business community (collectively, the “DIA Funders”). From these contributions, the DIA will make payments of $50 million each to the GRS and the PFRS over twenty years.

In addition, various other local and national foundations (collectively, the “Foundation Funders”) have pledged to make payments totaling $366 million over twenty years, to be divided equally between the GRS and the PFRS.

Upon the closing of the DIA settlement, the Foundation Funders will pay at least 5% of the amounts they have committed to pay, and the DIA and DIA Funders will pay at least $5 million.

In exchange for these payments, the City has agreed to transfer all of its right, title and interest in the art to the DIA to be held in a perpetual charitable trust for the benefit of the people of the City and the State. This will be a permanent transfer, free and clear of all liens, encumbrances, claims and interests of the City or its creditors.

Also as a condition precedent to the continued payment commitments of the DIA, the DIA Funders and the Foundation Funders, the City is required to adopt and maintain certain pension governance mechanisms, including the creation of a review board and the production of annual reports. The requirements are intended to ensure acceptable fiscal practices and procedures for management and investment of pensions.

*177 As a further condition of the commitments of the DIA Funders and Foundation Funders, the DIA will also provide an array of art programs at no cost or discounted cost to the residents of the State.

The retirement systems agree to waive and release any and all claims against the DIA Funders and Foundation Funders related to the DIA settlement or the City’s commitment to make payments to the retirement systems. The DIA settlement also includes mutual indemnification provisions.

Most of the objections to the DIA settlement have been withdrawn as part of settlements reached with those objecting creditors. However, some objections that pro se pension creditors filed do remain. These objections assert that the City should be required to sell the DIA art so that their claims can be paid in full. For the reasons stated in the next part and in part X.C.3. below relating to the best interests of creditors test, the Court overrules these objections.

3. The DIA Settlement Is Fair and Equitable

Two issues arise here. The first is whether the DIA settlement is a fair settlement. The Court will address that issue here. The second is whether the settlement, which is incorporated into the plan, is in the best interests of creditors as required by § 943(b)(7). The Court will address that issue in part X.C.3. below.

In determining the fairness of the DIA settlement, the Court must examine the strengths and weaknesses of the parties’ positions.

The Michigan Attorney General and the DIA take the position that all of the art at the DIA is held in charitable trust for the benefit of the people of the State and so it cannot be sold to pay the City’s debts. Trial Tr. 76:13-16, Sept. 18, 2014 (Dkt. # 7634); Mich. Att’y Gen. Op. 7272 (June 13, 2013).

The DIA further asserts that the donors of many of the pieces of art imposed specific transfer restrictions on them. Trial Tr. 103:25-106:6, Sept. 18, 2014. (Dkt. # 7634)

The City presented credible evidence that the Attorney General, the DIA itself and even many of its individual donors would vigorously challenge any attempt by the City to sell any of the art. See, e.g., Trial Tr. 28:8-15, 30:3-12, Oct. 2, 2014. (Dkt. # 7878)

Any sale could result in the cancellation of the tri-county millage taxes that support almost 70% of the DIA’s operating budget. Trial Tr. 113:6-19, Sept. 18, 2014. (Dkt. # 7634)

The DIA also presented credible historical documentary evidence in support of its position that the City holds the art in trust. Public Act 67 of 1919, which provided for the transfer of the DIA real property and its art from the Detroit Museum of Art (the predecessor to the DIA) to the City, required that the “property so conveyed shall in the hands of said city be faithfully used for the purposes for which the [Detroit Museum of Art] was organized.” Ex. 286.. In January 1920, after the 1919 transfer of the art, the trustees of the Detroit Museum of Art held a special meeting to determine its future. The minutes of that meeting reflect that the trustees believed the restrictions in PA 67 of 1919 “give assurance that the property cannot be used excepting for the same purposes as were provided for in the incorporation of the Detroit Museum of Art.” Ex. 269 at 4. At that same meeting, the trustees resolved to continue in existence to “encourage and receive in trust and to administer future gifts and legacies.” Id. at 5; see also Ex. 268 at 11 (minutes of meeting of City Arts Commission in 1961 *178 noting that the purpose of the Founders Society, the successor to the Detroit Museum of Art, was to “assist the City of Detroit in the operation of the DIA and ... to promote the people’s interest in and knowledge of art matters”).

Further, the recitals in the Operating Agreement between the City and the Founders Society dated May 15, 1984, first state that the City “has maintained and operated the DIA for over 60 years for the benefit of the citizens of the City and the State of Michigan.” It later states that the City would use state-allocated funds solely for the DIA, which was consistent with “the goal of continuing to benefit the citizens of the City and the State by preserving for their enjoyment the treasures of the DIA[.]” Ex. 281 at 1, 3.

Finally, the DIA’s current Collection Management Policy states that “the [DIA] must be ever aware of its role as trustee of the collection for the benefit of the public.” Ex. 267 at 11. Even the fagade of the DIA itself, built by the City in 1927, states that it is “Dedicated by the People of Detroit to the Knowledge and Enjoyment of Art.” See Trial Tr. 101:4-13, Sept. 18, 2014. (Dkt. # 7634)

This is strong evidence that the DIA was founded for the benefit of the residents of the City and the State, that the City believed that this was the case when the City received title to the art in 19Í9, and that the City has treated the DIA as a public trust for over one hundred years.

The evidence further establishes that nationally accepted standards for museums prohibit the de-acquisition of art to pay debt. Annmarie Erickson, the executive vice president and chief operating officer of the DIA, testified that the DIA is a member of the Association of Art Museum Directors (the “AAMD”), which represents over one hundred sixty art museums throughout the United States, Canada and Mexico. The AAMD standards provide that “proceeds from the sale of accessioned works of art by an art museum be used only to replenish the collection through the acquisition of other works of art.” Ex. 273 at 2. A violation of this standard “will be considered a serious breach of professional responsibility and sanctions may be recommended by a vote of the members of [AAMD]. The imposition of sanctions or penalties may mean suspension of all professional interchange, including loans and shared exhibitions.” Id at 3. This standard refers to the prohibition of the sale of art to pay operating expenses of a museum. However, Ms. Erickson testified that the standard would also apply to the' sale of art for the purpose of paying City debt. Trial Tr. 114:16-115:19, Sept. 18, 2014. (Dkt. # 7634) Accordingly, it is likely that if the City sold any of its art to pay its debts, the national and international art community would refuse to do business with the DIA. Trial Tr. 29:17-23, Oct. 7, 2014 (Dkt. #7878); Trial Tr. 115:2-19, Sept. 18, 2014. (Dkt. # 7634)

Further, the City presented credible evidence that de-accessing many highly valuable pieces at the same time would flood the art market and could cause prices to fall significantly. Trial Tr. 112:5-9, Sept. 16, 2014 (Dkt. #7618); Trial Tr. 14:19-15:18, Sept. 18, 2014. (Dkt. # 7634) Consequently, there is no guaranty that the City would achieve the high returns that many creditors asserted.

On the other hand, the creditors did submit substantial evidence and legal grounds to support the contrary view that the City can legally sell or monetize the DIA art. For example, the current DIA Operating Agreement states that “[t]he City shall retain title to and ownership of the (a) City art collection and (b) the DIA properties.” Ex. 254 at 15 (italics in original).

*179 On balance', the Court concludes that in any potential litigation concerning the City’s right to sell the DIA art, or concerning the creditors’ right to access the art to satisfy their claims, the position of the Attorney General and the DIA would almost certainly prevail.

However, the evidence also establishes that any such litigation would take years to conclude and would be costly to pursue. It also would be difficult for the City to endure that delay and expense while at the same time attempting to revitalize itself.

In addition, because of the DIA settlement and the Grand Bargain, the GRS and the PFRS will receive $816 million in outside funding that would not be available to them otherwise.

The Court therefore concludes that the DIA settlement was a most reasonable and favorable settlement for the City and its pension creditors. The Court overrules any remaining objections and approves the settlement under bankruptcy rule 9019.

G. The Pension Global Settlement

The final component of the Grand Bargain is the global settlement of pension-related issues, including the treatment of claims relating to the UAAL of the GRS and the PFRS.

1. The Terms of the Pension Global Settlement

The GRS, the PFRS and the retiree committee, on one hand, and the City, on the other hand, aggressively disputed the pension plans’ UAAL. The GRS and PFRS reported that as of June 30, 2013, the GRS was 70% funded and the PFRS was 89.3% funded with a combined total UAAL for both retirement systems of only $1.5 billion. Disc. Stmt, at 105. (Dkt. #4391) The City claimed that the UAAL is actually $2 billion for the GRS and $1.4 billion for the PFRS, for a total of $3 .4 billion. Id. at 107.

a. The Treatment of Pension Claims

As part of the settlement, the parties agreed to an allowed aggregate UAAL claim of $1.25 billion for the PFRS and $1.879 billion for the GRS.

Because, of the Grand Bargain, the GRS and the PFRS will receive $816 million in outside funding that would not have been available to them otherwise. Consequently, the pension reductions for retirees on account of the UAAL are now significantly less than the City had originally concluded would be necessary.

For PFRS pension claims, the accrued pension amount will not be reduced. However, the annual cost of living adjustment (“COLA”) will be reduced to 45% of the amount provided in pre-petition collective bargaining agreements.

For GRS pension claims, the accrued pension amount will be reduced by 4.5% and COLAs will be eliminated. Some GRS retirees will also be subject to the terms of an annuity savings fund (“ASF”) recoupment. Some of those GRS retirees have objected to this ASF recoupment. The Court addresses this issue separately in part III.H. below.

Because of the outside money committed as part of the Grand Bargain, the City will have little responsibility for funding the GRS and the PFRS through June 2023. During that time period, the PFRS will be funded exclusively from contributions from the DIA, the DIA Funders, the Foundation Funders and the State under the Grand Bargain, as described previously.

Through .2023, GRS funding will come from: (a) the DWSD; (b) a portion of the contributions from the State, the DIA, the DIA Funders, and the Foundation Fun-ders as part of the Grand Bargain, (c) the proceeds from the Stub UTGO Bonds as part of the UTGO settlement, described in part III.K. below, and (d) certain revenues *180 from City departments, (e) the Detroit Public Library and (f) the Detroit Regional Convention Facility Authority.

In addition, the parties agree that the pension plans in effect on the petition date will be frozen as of July 1, 2014. Active employees continuing to work for the City after July 1, 2014, will have benefits accrue under new hybrid pension plans. The pension formulas contained in the new hybrid plans are less generous than those in the prior plans.

b. Restoration of Pension Benefits

As part of the settlement, the parties agree upon certain provisions for the restoration of pension benefit payments if funding levels for the retirement systems exceed certain targets. Through 2023, the funding targets for purposes of benefit restoration are 75% for GRS and 78% for PFRS. See Disc. Stmt, at 19-23 (Dkt. # 4391); Plan, Exs. II.B.3.q.ii.C. and II. B.3.r.ii.C. (Dkt. # 8045) If at any time these targets are exceeded, the amount by which the targets are exceeded will be credited to a restoration reserve account. When the assets credited to the restoration reserve account can fully fund certain percentages of the reduced benefits (for example, when the GRS reserve account can fund 0.5% of the 4.5% benefit reduction), restoration payments will'begin. As more money becomes available in the restoration reserve accounts, more benefits will be restored. If funding levels for the retirement systems drop, money in the restoration reserve accounts may no longer be available and restoration payments will be suspended.

c. Governance and Oversight

As described previously, the parties have agreed to establish investment committees for the PFRS and the GRS as required by the State Contribution Agreement. The retiree committee has also agreed to defer to the retirement systems, the City and the State regarding post-effective date governance of the prior pension plans and restoration mechanics.

The parties have further agreed that until June 30, 2023, the boards of trustees of each system will adopt and maintain an investment return assumption and discount rate of 6.75% for purposes of determining the assets and liabilities of the pension systems.

The plan also includes a provision that all parties are enjoined until June 30, 2023 from making any amendment to the terms, conditions and rules of operation of the GRS and the PFRS relating to the calculation of pension benefits, the selection of investment return assumptions, or the contributions to the pension systems.

The City has also set certain targets at which the UAAL for the GRS and the PFRS must be funded. For 2023, the funding targets are 70% for the GRS and 78% for the PFRS. For 2053, in 40 years, the targets are 100% for each. Ex. 723.

Finally, the retiree committee has agreed that it will support the plan and advisé retirees to vote in favor of the plan. The committee further agreed to suspend its appeal of the Court’s eligibility order and to dismiss the appeal upon the effective date of the plan.

The pension classes voted to accept the plan by 82% in class 10 (PFRS) and 73% in class ll(GRS).

2. The Pension Global Settlement Is Fair and Equitable

Despite these strong votes in favor of the plan, the treatment of pension claims in the City’s plan has been a significant issue in this case. In the Court’s eligibility opinion, it held that because of the Bankruptcy Clause of the U.S. Constitution, the federal bankruptcy power could be used to impair pension rights in this *181 case, even if the Michigan constitution protects them. In re City of Detroit, Mich., 504 B.R. 97, 150-54 (Bankr.E.D.Mich. 2013). The Court stands by that decision.

Here at the confirmation stage, the Court must determine whether the plan’s treatment of pension claims meets the legal requirements for plan confirmation and settlement approval. The plan confirmation issues include good faith, best interests of creditors, feasibility and others. The Court addresses these questions separately in other parts of this opinion. The Court will now address whether the pension settlement is a reasonable settlement under bankruptcy rule 9019.

Despite the acceptance of the plan by the pension classes, a significant number of pension creditors still strongly oppose the impairment of their pension rights. They believe and assert in their many objections that under the Michigan constitution, their pension rights are not subject to impairment. They credibly state that they worked hard for the City, that they did nothing wrong, and that these pension impairments will cause them real hardship. Some also argue that the pension impairments in the plan are unnecessary because the pension plans are in fact fully funded. They further argue that if the pension plans are underfunded, as the City asserts, the City should sell the art at the DIA or other City assets. As discussed in part II.D. above, many of these objecting parties took the time to come to court to give a strong, sincere and personal voice to their objections.

The Court, however, finds that the pension settlement is a reasonable settlement and overrules those objections to the plan and to the pension settlement.

Several representatives of the pension classes appealed this Court’s eligibility decision. The City, of course, takes the position that the eligibility decision was correct and should be affirmed. To determine the reasonableness of the settlement, it is incumbent upon this Court to estimate the parties’ likelihood of success of the appeal. That is challenging here. The issue of whether pensions can be impaired in bankruptcy despite state constitutional protection is a novel one. However, this Court believes that its reasoning in the eligibility decision is sound. The Court therefore estimates that the pension creditors’ chances of success on appeal would be in the range of 25%.

The next step is to determine each side’s best-case scenario. For the City, that would plainly be to prevail on appeal and to continue in this chapter 9 case. For the pension creditors, however, the best-case scenario is much less clear. The City presented convincing evidence at the confirmation hearing that it would have no ability to pay the UAAL even if the pension creditors were to prevail on appeal. Gau-rav Malhotra, an expert on restructuring and financial analysis at Ernst & Young, LLP, testified that without restructuring, the City would have a $4 billion deficit over the next ten years, or $390 to $400 million per year, due largely to the City’s unsustainable legacy costs. Trial Tr. 71:10-13, Sept. 29, 2014 (Dkt. # 7819); Ex. 109 at 6.

It is therefore a vast understatement to say that the pension settlement is reasonable. It borders on the miraculous. No one could have foreseen this result for the pension creditors when the City filed this case. Without the outside funding from the Grand Bargain, the City anticipated having to reduce pensions by as much as 27%. Disc. Stmt, at 17. (Dkt. #4391) The pension reductions in the pension settlement are minor compared to any reasonably foreseeable outcome for these creditors without the pension settlement and the Grand Bargain.

*182 At the same time, the Court recognizes that even these relatively minor pension reductions will cause real and, in some cases, severe hardship. However, this bankruptcy, like most, requires shared sacrifice because the City is insolvent and desperately needs confirmation of this plan to fix its future.

As noted, a substantial majority of both classes 10 and 11 voted in favor of the City’s plan and accepted the necessity of shared sacrifice for the common good of the City. That collective judgment is entitled to substantial consideration here.

Accordingly, the Court finds that the pension settlement is reasonable and approves it.

H. The Annuity Savings Fund Recoupment Settlement

In the City’s long-standing Annuity Savings Fund program, GRS employees could voluntarily contribute a percentage of their gross pay to a separate pension account. The GRS then invested these ASF contributions with the other GRS assets that the City contributed or that the GRS earned on its investments. Each participant’s ASF account increased in value based on the participant’s contributions and the interest that the GRS credited to that account.

1.The Dispute Over the Excess ASF Credits

For many years, the GRS credited interest in each participant’s ASF account at the assumed rate of return even when the actual rate of return was less.

The City claims that this diversion of assets increased the GRS UAAL. It therefore contends that recoupment of the excess interest from the ASF participants is necessary and appropriate to offset the increased UAAL. That recoupment in turn reduces the pension cuts to the GRS retirees. The City calculates that the total of this claim is approximately $387 million.

The ASF participants assert that there is no basis for recoupment.

2. The Terms of the ASF Settlement

The parties have settled this issue as part of the global pension settlement. The City and the retiree committee have agreed that the ASF recoupment amount for each retiree will be limited to the total amount of excess interest that was credited between July 1, 2003, and June 20, 2013. The GRS will amortize each ASF participant’s recoupment amount over the participant’s life expectancy with interest at 6.75%, tó be deducted from the participant’s monthly pension check or ASF account. In no event will the total ASF recoupment from any participant exceed the amount necessary to amortize the ASF excess amount calculated for the participant at 6.75% interest. Each ASF participant will have the option to pay the ASF recoupment amount in a single lump sum cash payment.

The parties also agreed upon limitations on the ASF recoupment. The ASF re-coupment will be capped at 20% of the highest value of each participant’s ASF account between July 1, 2003, and June 30, 2013. An additional cap limits the combined pension reduction and ASF recoupment for each participant to 20% of such participant’s annual pension.

The City anticipates that this settlement will result in an additional $190 million for the GRS. City’s Consol. Resp. to Certain Pro Se Objections, ¶ 8 at 9. (Dkt. # 7303) This is approximately 49% of the City’s ASF claim.

3. Objections to the ASF Settlement

Several GRS participants object to the ASF recoupment in the plan. These include: Hassan Adeem (Dkt. # 5057); George Cannon (Dkt. # 5126); Roger N. *183 Cheek (Dkt. #5947); Jamie S. Fields (Dkt. # 4404); Michael J. Karwoski (Dkt. ## 5089 and 5923); Mattie D. Pritchett (Dkt. # 5887); John P. Quinn (Dkt. # 5723); Dennis Taubitz (Dkt. # 5971); Gerald G. Thompson (Dkt. #3352); Jean Vortkamp (Dkt. #4578); Mary Jo Vort-kamp (Dkt. #4579); Steven Wojtowicz (Dkt. # 6870); and Demetria Wright (Dkt. # 5795). They argue:

1. The ASF recoupment violates the applicable statute of limitations.

2. Under state law, the City’s recoupment claim has no merit.

3. They did nothing that justifies imposing this liability on them.

4. The GRS board of trustees ' did nothing wrong and was acting within its complete discretion under Sections 47-2-17 and 47-2-18 of the Detroit City Code by allocating the excess interest payments to ASF participants.

5. The City has no standing to assert the recoupment claim.

6. They do not consent to the lesser treatment of their pension claim in class 11 that results from the re-coupment.

7. The treatment of the City’s recoupment claim in the plan violates their right to be heard on the merits.

8. The City did not properly disclose the 6.75% interest rate.

9. The 6.75% interest rate is illegal, usurious and unfair.

10. The Court should carve the ASF settlement out of the plan and then approve the plan.

11. The ASF recoupment proposes a seizure of the assets of creditors holding class 11 claims without due process of law because the City has not brought any action under bankruptcy or non-bankruptcy law that would provide a legal basis for ASF recoupment.

12. The ASF recoupment settlement in the plan constitutes an improperly asserted preference or fraudulent transfer action.

13. The City is precluded from recouping the ASF excess interest amounts because the City had knowledge of, or participated in, the allocation of these amounts to the ASF participants.

14. As a result of the imposition of the 6.75% interest rate to annuitize the ASF excess amounts, amounts recovered from ASF distribution recipients will “greatly exceed” the ASF recoupment cap, which is 20% of the highest value of the ASF distribution recipient’s annuity savings account during the ASF re-coupment period.

4. The ASF Settlement Is Fair and Equitable, and Does Not Violate the Bankruptcy Code

The ASF recoupment settlement is a part of the global pension settlement and therefore a part of the Grand Bargain. It is also a part of the City’s plan. The bankruptcy code provides that a class of claims accepts a plan “if such plan has been accepted by creditors ... that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors ... that have accepted or rejected such plan.” 11 U.S.C. § 1126 (c). Although there are dissenting creditors in class 11, “[i]n a Chapter 9 [case], dissenting creditors in an accepting class are bound by the accepting vote of the other members.” In re City of Colorado Springs Spring Creek Gen'l Improvement Dist., 187 B.R. 683, 690 (Bankr. D.Colo.1995).

*184 The Court, therefore, has only two issues to consider. The first is whether the settlement is fair and equitable. The second is whether the plan provisions that incorporate the ASF settlement violate the bankruptcy code.

It is not for the Court to rule on the merits of the City’s ASF recoupment claim. Nor is it for the Court to rule on the merits of the participants’ defenses to that claim. The Court only reviews the parties’ respective positions to determine whether the settlement is fair and equitable.

The Court- finds that the City’s recoupment claim would quite likely succeed. As noted, the practice was to credit interest in each participant’s ASF account at the assumed rate of return even when the actual rate of return was less. The legal authority of the GRS board to do that is doubtful. The prudence of the practice is even more doubtful. The practice ignored the practical reality that over the long term, the GRS needs to retain its earnings that exceed the assumed rate of return to offset the earnings shortfalls that result when the actual rate of return is less than the assumed rate of return. The City’s claims of breach of fiduciary duties and diversion of assets are therefore quite strong. Its claim that recoupment against ASF participants is the proper equitable remedy is also quite strong.

On the other hand, the Court considers that the asserted defenses have less merit.

On balance, it appears that the City’s recoupment claim would have a reasonable likelihood of success, in the range of 60-■70%.

However, the length, complexity and expense of litigation would be substantial. If • the City prevails, issues of collectability against ASF participants could also be substantial, depending upon the structure of the final judgment.

The Court also considers that this settlement is part of the much larger settlement of all pension-related issues. The class of claims affected by the settlement, class 11, accepted the settlement by a vote of 73%. Finally, the Court notes that the caps and other limitations on the recoupment amount that the parties negotiated should reduce the hardship of it.

Fairly weighing these factors suggests that the ASF recoupment settlement is well within the range of possible reasonable settlements. The Court, therefore, overrules the objections and finds the ASF recoupment portion of the pension settlement is fair and equitable. The Court further concludes that nothing about the ASF settlement violates the bankruptcy code.

I. The OPEB Settlement

In addition to their pension claims, retirees also have claims against the City for loss of other post-employment benefits (“OPEB claims”) including post-employment health, vision, dental, life and death benefits. These OPEB claims constitute class 12 in the plan.

1. The Disputes Over the OPEB Claims

The amount of the City’s outstanding obligation related to OPEB claims has been the subject of intense dispute, described more fully below. However, all estimates put the liability in the multi-billion dollar range. OPEB claims represent the single largest portion of the City’s unsecured debt obligation. Trial Tr. 11:5— 9, Oct. 2, 2014. (Dkt. # 7878)

In early 2014, the City notified its retirees that it would drastically change the healthcare plans that it offered to them, resulting in significantly lower benefit payments. In response, the retiree committee *185 filed an adversary proceeding against the City seeking an injunction to prohibit it from unilaterally changing the healthcare benefits that it provided to retirees. The committee asserted largely equitable grounds relating to the hardship that terminating these benefits would naturally cause retirees. There did not appear to be any substantial legal grounds for the requested- relief. See, Complaint, Official Comm. of Retirees v. City of Detroit (In re City of Detroit), No. 13-05244 (Bankr. E.D.Mich. Oct. 22, 2013). (Dkt. # 1)

The City and the retiree committee disputed the present value of the OPEB claims. The City estimated the amount of the claim to be roughly $3.77 billion. The retiree committee estimated it to be approximately $5 billion. City’s Consol. Reply to Certain Objections to Confirmation of Fourth Am. Plan at 13. (Dkt. # 5034) The difference in the estimated values of the claim is the result of differing actuarial assumptions and discount rates that the parties used. Id.

The City and the retiree committee also disagreed on the characterization of payments that the City made on OPEB benefits after the City filed this case. The City’s position was that these payments were a partial satisfaction of the OPEB claim and should reduce the amount of New B Notes that, under the plan, would be distributed on account of the allowed OPEB claim on a dollar-for-dollar basis. The retiree committee argued that the payments should be ignored for purposes of calculating the OPEB claim amount. Id. at 14.

2. The Terms of the OPEB Settlement

The City and the retiree committee reached a settlement of their disputes related to the OPEB claim as part of the pension global settlement.

Pursuant to the settlement, the total allowed amount of the OPEB claim is fixed at $4.303 billion — $2.208 billion for PFRS retirees and $2.095 billion for GRS retirees.

In addition, the City and retiree committee have settled on the treatment of the OPEB claim. The City will establish VE-BAs for the PFRS and the GRS. On the effective date, the City will distribute $232 million in New B Notes to the PFRS VEBA and $218 million in New B Notes to the GRS VEBA. The retiree committee also negotiated an improved interest rate for the New B Notes — 4.0% for the first twenty years and 6.0% for the last ten years. The New B Notes have a thirty-year maturity.

The City will also distribute $42.7 million in New B Notes to the VEBAs from the Excess New B Notes. As described in part III.M. below, the Excess New B Notes are a result of the settlement agreements with holders of class 9 claims.

The start-up costs for the VEBAs will be funded by: (1) $8 million from a reserve fund held in the currently existing benefits plans; (2) approximately $3.5 million from charitable contributions; (3) an advance of the interest payment on the Excess New B Notes due in October of 2015; and (4) $18 million in grants from various local foundations and the Detroit Benefits Board. Ex. 720; see also Letter Agreement with Retiree Committee at 2-3, Nov. 4, 2014. (Dkt. # 8183)

The VEBAs will provide health benefits, including life insurance, to retirees and certain of their beneficiaries and dependents. Each VEBAs will be governed by boards of trustees that will be responsible for the management of its assets, for its administration, and for determining the beneficiaries’ benefits.

As a result of this settlement and the creation of the VEBAs, the City will have no further responsibility to provide retiree *186 healthcare or other benefits for retirees. Further, the City will have no responsibility to provide life insurance or death benefits to current or former employees. The current death benefit plan will be frozen and will be self-liquidating. Any existing retirees who participate in the death benefit plan will be given a one-time opportunity to receive a lump sum distribution of the present value of the actuarially determined death benefit.

The plan treats the OPEB claim in class 12. The estimated recovery for the class 12 OPEB claim is 10%. Class 12 accepted the plan by over 88%.

3. The OPEB Settlement Is Fair and Equitable

The City contends that the OPEB settlement is fair and reasonable for several reasons. First, the City believes that the settlement avoids protracted and expensive litigation to resolve intense factual and legal disputes. Second, the City asserts that, given the range of estimated OPEB claim values between $3,771 billion and $5 billion, the settled allowed claim amount of $4,303 billion is reasonable. Lastly, the City argues that the settlement is in the best interests of the City and its creditors because it settles one of the City’s largest liabilities and at the time, allowed the City to bring the bankruptcy closer to its conclusion.

The Court agrees that litigation to resolve the amount of the City’s OPEB liability would be complex, lengthy and very expensive. Resolution of the litigation would turn largely on actuarial opinion testimony with extensive discovery regarding multiple competing experts. Disc. Stmt, at 15. (Dkt. #4391) The evidence would be intensely fact-specific. Trial Tr. 18:1-5, Oct. 2, 2014. (Dkt. # 7878) As the City points out, any litigation could also involve resolution of other fact-intensive issues, such as retiree census data and the proper discount rate to be applied to liabilities. Disc. Stmt, at 152. (Dkt. #4391)

The outcome of any potential litigation to resolve the claim would be uncertain. The City’s view that the retiree committee would zealously oppose the City’s position is justified. Trial Tr. 17:12-15, Oct. 2, 2014. (Dkt. # 7878) It is also significant that the City would be responsible for the committee’s professional fees in any such litigation. A settled claim amount that falls almost exactly midway between the disputed values is therefore reasonable.

The Court also finds that creation of the VEBAs to address the OPEB claim is reasonable. The City presented evidence that, without restructuring, OPEB liabilities would account for as much as 26% of expenditures from the City’s general fund by the year 2023. Trial Tr. 177:10-13, Oct. I, 2014 (Dkt. #7850); Ex. 721. Such a large liability would destroy the City’s ability to make the financial and operational changes necessary to provide adequate municipal services.

The City’s evidence also shows that transferring the OPEB legacy costs to the VEBAs will reduce the City’s obligation to a much more manageable 3% of general fund expenditures over the next 30 years. Trial Tr. 173:21-174:15, Oct. 1, 2014 (Dkt. #7850); Ex. 721.

Accordingly, the Court finds that the OPEB settlement is reasonable and approves it.

J. The 36th District Court Settlement

Although the 36th District Court is a separate legal entity from the City, under state law, the City is required to fund the operations of the court. Mich. Comp. Laws §§ 600.8103 and 600.8104. When the City filed this bankruptcy case, the 36th District Court was defending various employment-related claims. Because the City is required to fund the 36th District *187 Court, it would ultimately be liable for the payment of any judgments against the 36th District Court on those claims.

During the bankruptcy proceeding, the creditors with claims against the 36th District Court participated in arbitration and obtained awards in the aggregate amount of approximately $14 million. Trial Tr. 58:14-17, 59:24-25, Oct. 2, 2014. (Dkt. # 7878)

AFSCME is the bargaining agent for employees of the 36th District Court. AFSCME, the individual creditors and the 36th District Court itself filed proofs of claim related to the obligations arising from those arbitration awards.

The parties have settled. Under this settlement, the 36th District Court creditors are classified into class 17 and the aggregate liquidated allowed amount of their claims is fixed at $6 million. The parties have agreed to settle the claims for a recovery of $2 million (33%) and the 36th District Court will withdraw its proof of claim entirely with prejudice.

The 36th District Court creditors whose claims are less than $100,000 will receive 33% of their allowed claim in cash. Creditors whose claims are more than $100,000 will receive 33% of their allowed claims payable in five equal annual installments plus simple interest at a rate of 5% per year.

The parties have also agreed to release all of the claims that they may have against each other, except that AFSCME and some of the individual creditors do not release claims that they have against the 36th District Court related to certain identified pending proceedings. The City has also agreed to carve out an exception to the broad third-party releases in the plan to allow the 36th District Court creditors to pursue actions against the State and its related entities with respect to the liabilities that the 36th District Court creditors assert to the extent that the plan does not satisfy those liabilities.

AFSCME and the individual creditors are deemed to have voted their respective claims in favor of the plan in the amounts established by the Order Regarding the Voting of Claims Relating to the 36th District Court. (Dkt. # 5905)

The Court finds that this settlement is reasonable. The claims against the 36th District Court were obviously not frivolous, as they have been reduced to substantial awards in arbitration. Outside of bankruptcy, the City would be liable to pay those claims on behalf of the court. If the City had chosen instead to continue to contest those claims, the number of claims would have made the expense of the litigation significant. Trial Tr. 62:2-10, Oct. 2, 2014. (Dkt. #7878)

Settling the dispute for an allowed claim of $6 million with an ultimate distribution of $2 million is reasonable. Consequently, the Court approves the 36th District Court settlement.

K. The UTGO Settlement

Under Michigan law, the City is authorized to issue variable rate unlimited tax general obligation bonds (“UTGO Bonds”) with approval from voters. Each year, the City is required to levy sufficient ad valo-rem property taxes to pay the debt service on those bonds without limitation as to rate or amount. Mich. Comp. Laws § 141.2701 (1).

When the City filed this case, it had as much as $480 million in outstanding UTGO Bonds, including principal and accrued interest (“Prior UTGO Bonds”). The claims related to Prior UTGO Bonds are in class 8.

*188 1. The Dispute Regarding the UTGO Bonds

On October 1, 2013, and April 1, 2014, the City defaulted on its obligation to make principal and interest payments on the Prior UTGO Bonds. On both occasions, Ambac Assurance Corp., Assured Guaranty Municipal Corp. and National Public Finance Guarantee Corp. (collectively, the “UTGO Bond Insurers”) paid bondholders’ claims on the defaulted payments under insurance policies held with them and became subrogated to the rights of those bondholders.

On November 8, 2013, the UTGO Bond Insurers filed adversary proceedings against the City seeking declaratory relief regarding their rights with respect to the Prior UTGO Bonds. _ See First Am. Compl. for Declaratory J., Nat’l Pub. Fin. Guar. Corp. v. City of Detroit (In re City of Detroit), No. 13-05309 (Bankr. E.D.Mich. Dec. 23, 2013) (Dkt. #41) (“NPFG Complaint”); Am. Compl. for Declaratory J., Ambac Assurance Corp. v. City of Detroit (In re City of Detroit), No. 13-05310 (Bankr.E.D.Mich. Dec. 23, 2013) (Dkt. # 57) (“Ambac Complaint”).

The UTGO Bond Insurers contended that the Prior UTGO Bond debt should be subject to special treatment under the plan. They argued that because taxpayers specifically voted to approve the issuance of these bonds, the taxes levied to pay them are special revenues that can only be used to service the Prior UTGO Bond debt. NPFG Complaint, ¶¶ 83-86 at 33-34; Ambac Complaint, ¶ 77 at 35-36. The UTGO Bond Insurers also argued that they had statutory and contractual liens on the tax revenues. NPFG Complaint, ¶¶ 80-82 at 32-33; Ambac Complaint, ¶¶ 66-76 at 32-35. Finally, the UTGO Bond Insurers relied on various trust theories to argue that the City was simply a pass-through entity between the taxpayers and the bondholders. NPFG Complaint, ¶¶ 76-79 at 31.

The City disputed these claims, arguing that the Prior UTGO Bonds are general unsecured obligations. The City also argued that the UTGO Bond Insurers did not have standing to seek relief under the Michigan Revised Municipal Act because that act does not provide a private right of action and because § 904 prohibits the bankruptcy court from interfering with the City’s decisions regarding its property. See, e.g., Br. in Supp. at 7-16, in City’s Motion to Dismiss, Ex. 3, Nat’l Pub. Fin. Guar. Corp. v. City of Detroit (In re City of Detroit), No. 1305309 (Bankr.E.D.Mich. Dec. 23, 2013). (Dkt. # 38)

2. The Terms of the UTGO Settlement

The City and the UTGO Bond Insurers entered into negotiations and reached a settlement of their disputes. The parties agreed to an allowed claim in the amount of $388 million relating to the Prior UTGO Bonds.

Just under $288 million of the Prior UTGO Bonds will be restructured and reallocated among the holders of the bonds (“Restructured UTGO Bonds”), as more fully described below. The Restructured UTGO Bonds represent a 74% recovery for holders of the Prior UTGO Bonds.

As part of the restructuring of the Prior UTGO Bonds, the City will issue to the Michigan Finance Authority (“MFA”) an unlimited tax obligation bond (the “Municipal Obligation”) on the same terms as the Prior UTGO Bonds and secured by a pledge of the UTGO Bond tax levy and certain distributable state aid that the City expects to receive. The MFA will then issue the Restructured UTGO Bonds on the same terms as the Municipal Obligation. These Restructured UTGO Bonds will be payable from and secured by the Municipal Obligation, the City’s pledge of *189 the UTGO Bond tax levy and the distributable state aid the City expects to receive. The Restructured UTGO Bonds will then be exchanged for roughly $288 million of Prior UTGO Bonds. In this way, the Pri- or UTGO Bondholders will then hold bonds issued by the MFA that are secured by the payment rights associated with the UTGO Bond tax levy and a fourth lien on certain distributable state aid. Plan, Ex. I.A.285. (Dkt. # 8045)

The distributable state aid will only be used to pay the Restructured UTGO Bonds if the collection and deposit of the UTGO Bond tax levy has not reached specified amounts by the dates on which installments of the distributable state aid are deposited into the City’s accounts.

The remainder of the Prior UTGO Bonds (the “Stub UTGO Bonds”) in the principal amount of roughly $43 million will be reinstated and will be payable from the UTGO Bond tax levies. The holders’ rights to payment of the Stub UTGO Bonds will be assigned to a designee of the City for use in funding the income stabilization program that is part of the State Contribution Agreement described in part III.E. above.

In exchange, the parties agree that upon confirmation of the plan, all litigation related to the Prior UTGO Bonds will be dismissed with prejudice and all proofs of claim filed with respect to the Prior UTGO Bonds will be deemed resolved and fully satisfied.

The parties also agree that the UTGO Bond Insurers will be included as exculpated parties under the plan. The parties further agree that they release each other from any and all liabilities related to the Prior UTGO Bonds or the adversary proceedings filed by the UTGO Bond Insurers.

3. The UTGO Settlement Is Fair and Equitable

The UTGO Bond Insurers’ arguments, while novel, may have some merit. When the Prior UTGO Bonds were issued, the City had arguably reached its maximum statutory limitations for ad valorem taxes. Ambac Complaint, ¶ 34 at 16. However, because of voter approval for these specific bonds, the City was able to collect additional tax revenues to pay them. Further, Michigan law provides strict controls and limitations over use of ad valorem taxes that are levied to retire debt. See, e.g., Mich. Comp. Laws § 141.2701 (l)-(3). For example, the City is required to segregate the additional ad valorem taxes into separate accounts and use those monies to pay the debt service on the Prior UTGO Bond§. Mich. Comp. Laws § 141.2701 (l)(d)(i). The UTGO Bond Insurers argued that this created a statutory lien on the ad valorem taxes collected to service the Prior UTGO Bonds. The UTGO Bond Insurers also had at least a colorable argument that the City intended to pledge a security interest in the revenues from the ad valorem property taxes.

The City contested these claims and argued that the Prior UTGO Bonds were only general unsecured claims. See, e.g., Br. in Supp. at 15-16, in City’s Mot. to Dismiss the Complaint, Ex. 3, Ambac As surance Corp. v. City of Detroit (In re City of Detroit), No. 13-05310 (Bankr. E.D.Mich. Dec. 23, 2013) (Dkt. #53); City’s Consol. Reply, ¶ 19 at 12 (Dkt. # 5034).

Mr. Orr, the emergency manager for the City, testified that if the UTGO Bond Insurers had been successful in litigation, the City could have faced a large secured claim that could not be impaired in bankruptcy. This would also have precluded the City from access to the additional tax *190 revenue. Trial Tr. 187:6-10, Oct. 1, 2014. (Dkt. # 7850) In addition, Mr. Orr testified that the City could have been required to raise taxes if the UTGO Bond Insurers were successful in their arguments. Id. at 190:3-6.

This settlement resolves all issues relating to the UTGO Bonds in adversary proceedings 13-05309 and 13-05310. These cases had already been vigorously litigated before the settlement was reached and any further litigation would have been lengthy, complex and time consuming. The UTGO Bond Insurers were not only motivated to protect their claims in this proceeding but were also highly motivated to avoid any negative precedent that could be used by other municipalities with UTGO bond financing. Id- at 188:1-189:25.

For this reason, even a favorable outcome for the City in litigation could have had negative consequences for the City. The City may have lost access to the capital markets when it emerges from bankruptcy or it may been required to pay higher interest rates for bond debt. Id. at 191:1-8. The settlement avoids these potential outcomes.

The outcome of the litigation was not certain. If the Prior UTGO Bonds claims were determined to be general unsecured claims, the dividends on the UTGO bond claims would have been about 10%. On the other hand, if the UTGO Bond Insurers were successful in their arguments that their claims were secured, the dividend would likely have been 100%.

On balance, the Court finds that .the City’s chance of success on the merits of the litigation was a coin-toss. The Court concludes that the other circumstances do warrant the premium that the 74% recovery settlement reflects. Accordingly, the Court finds that this recovery is within the range of reasonable settlements, although perhaps at the upper end of that range.

The settlement is also beneficial to other creditors. The Stub UTGO Bonds will be assigned to the City for use in the income stabilization program to ensure that pension reductions do not force City retirees into poverty.

Class 8 accepted the plan by a vote of 87%.

The Court finds that the UTGO settlement is fair and reasonable, and approves it.

L. The LTGO Settlement

Michigan law also allows the City to issue limited tax obligation bonds (“LTGO Bonds”), payable from ad valorem tax revenues. Mich. Comp. Laws § 141.2101 et seq. Unlike UTGO Bonds, LTGO Bonds are subject to applicable charter, statutory or constitutional rate limitations. Mich. Comp. Laws § 141.2701 (3). State law does require the City, however, to set aside enough revenues from the ad valo-rem tax collections to pay LTGO Bonds as a “first budget obligation.” Id.

1. The Dispute Regarding the LTGO Bonds

When the City filed this case, it had almost $164 million in outstanding LTGO Bonds, including principal and accrued interest.

On October 1, 2013, and April 1, 2014, the City defaulted on its obligation to make interest payments on the LTGO Bonds. On both occasions, Ambac, insurer of two-thirds of the LTGO Bonds, paid claims on the defaulted payments and became subrogated to the rights of the bondholders. On November 8, 2013, Ambac filed a complaint against the City seeking declaratory relief regarding its rights with respect to the LTGO Bonds. See Ambac Complaint.

The City asserted that the LTGO claims are merely unsecured claims. See, e.g., *191 Br. in Supp. at 22-33, in City’s Mot. to Dismiss, Ex. 3, Ambac Assurance Corp. v. City of Detroit (In re City of Detroit), No. 13-05310 (Bankr.E.D.Mich. Dec. 23, 2013). (Dkt. # 83)

2. The Terms of the LTGO Settlement

The City, Ambac and BlackRock Financial Management, on behalf of certain managed funds and accounts holding uninsured LTGO Bonds, entered, into negotiations and reached a settlement of their disputes. Under the settlement agreement, the City has the option either to issue new LTGO Bonds in the amount of $55 million or to pay $55 million in cash using exit financing. Mr. Malhotra testified that the City has elected to make the $55 million cash payment. Trial Tr. 58:16-22, Oct. 21, 2014. (Dkt. #8098)

The LTGO Bond creditors will also receive $17.3 million in Excess New B Notes from the class 9 settlement, described in part III.M. below.

As part of the settlement, Ambac has agreed to cease all litigation and the parties agree that the LTGO settlement resolves and fully satisfies all proofs of claim filed with respect to the LTGO Bonds. In addition, Ambac and BlackRock Financial Management will be considered exculpated parties under the plan. • Finally, Ambac and the City agree to release each other from any and all claims related to the LTGO Bonds and the adversary proceeding that Ambac filed.

The plan classifies the LTGO Bonds claims in class 7. The total estimated recovery for holders of LTGO Bond claims is 41%. The class accepted the plan by a vote of 63%.

3. The LTGO Settlement Is Fair and Equitable

The Court finds that the LTGO settlement is reasonable. The parties’ arguments are very similar in nature to those described in the UTGO section above.

The LTGO Bond creditors had the additional argument that they were entitled to priority over other unsecured claims because the City had to pay them as a “first budget obligation” under state law. Mich. Comp. Laws § 141.2701 (3); Ambac’s Obj. to Fourth Am. Plan at 27-31. (Dkt. # 4677) The meaning of this obligation in the statute is unclear in a bankruptcy context. However, if the LTGO Bond creditors had been successful in this argument, the City could have been required to pay them before it paid for its operating expenses. Trial Tr. 203:3-6, Oct. 1, 2014. (Dkt. # 7850)

The Court concludes that the City had a substantial likelihood of prevailing in the LTGO Bond litigation, perhaps a 75% chance. If the LTGO Bond claims were determined to be general unsecured claims, recovery for the LTGO creditors would be approximately 10%. If the LTGO Bond claims were found to have priority over other unsecured claims, the recovery would be 100%. Accordingly, a 41% recovery is well within the range of reasonable settlements.

As noted, the LTGO recovery is estimat-' ed to be 41% while the UTGO recovery is estimated to be 74%. The City’s justification for this difference is that the LTGO Bond creditors had somewhat weaker arguments on the merits of their claims. Trial Tr. 9:12-10:1, October 2, 2014. (Dkt. # 7878) For example, the LTGO Bond creditors could not point to a dedicated ad valorem tax stream that had been approved through voter referendum. In addition, the City felt that the state law requirement that the UTGO Bonds must be paid without limitation meant the UTGO Bondholders had a more robust position than the LTGO Bondholders. Id. Nothing in the record contradicts these *192 conclusions and the Court finds that they are reasonable.

Consequently, the Court approves the settlement with the LTGO Bond creditors.

M. The Settlements Related to the Certificates of Participation

By 2005, the City had fallen behind in its constitutional and statutory requirements to make contributions to the PFRS and the GRS. At the time, the City did not have sufficient resources to fully fund its pension plans, and the amounts it needed to borrow would have exceeded the debt limits under the Home Rule City Act (“HRCA”), Mich. Comp. Laws § 117.1 .

In an attempt to meet its funding obligations without violating the HRCA, the City entered into a series of complex financial transactions. First, the City created two service corporations and éntered into contracts with them in which the City agreed to make payments to the service corporations (the “City Payments”) for the service of helping the City with its funding obligations to the retirement systems (the “Service Contracts”).

The service corporations then created two funding trusts to sell certificates of participation (“COPs”) in the City Payments. In order to make the COPs marketable to investors, the City sought out monoline insurers, including FGIC and Syncora, to issue policies guaranteeing the payments of principal and interest on certain of the COPs.

The proceeds from the sale of the COPs were remitted by the funding trusts to the service corporations, which in turn remitted the funds to the PFRS and the GRS to satisfy the unfunded pension obligations of the City. Finally, the service corporations assigned their rights to receive the City Payments to the funding trusts, which used the payments to pay the COPs Holders the interest and principal that they were due. A structurally identical transaction was also completed in 2006. The Court will refer to these transactions collectively as the “COPs Transaction.”

By creating this structure, the City could characterize the payments that it made as contractual obligations for future services under the Service Contracts, rather than debt service. This allowed the City to avoid (or evade) the debt limita-' tions in the HRCA.

1. The Dispute Relating to the COPs Transactions

Immediately before filing its chapter 9 petition, the City stopped making the City Payments. FGIC made payments to the COPs Holders under the insurance policies that it issued for the payments that the City did not make. When the City filed this case, the outstanding COPs obligation was approximately $1.2 billion.

On January 31, 2014, the City filed an adversary proceeding against the service corporations and the funding trusts seeking a declaratory judgment that the Service Contracts were void ab initio and unenforceable. See Compl. for Declaratory J. and Inj. Relief, City of Detroit v. Detroit General Retirement System Service Corp., No. 14-04112 (Bankr.E.D.Mich. Jan. 31, 2014) (Dkt. # 1) (“City Complaint”). The Court later permitted FGIC and the COPs Holders to intervene in that adversary proceeding. (Dkt. ## 73 and 93)

The City argued that the service corporations were simply sham entities that it created for the sole purpose of making a one-time payment of the COPs proceeds to the PFRS and the GRS. The City claimed that the Service Contracts were thus not future service contracts at all but rather a means for the City to incur debt in contravention of the HRCA. Because the Service Contracts were illegal under state law *193 when they were created, the City argued, they were unenforceable and void ab ini-tio.

The City also argued that the COPs Transaction is void because the City did not obtain the required approvals from the Michigan Department of Treasury before undertaking a debt financing of that magnitude as required by the Revised Municipal Finance Act, Mich. Comp. Laws 141.2101, et seq.

These arguments have substantial merit. According to the allegations in the City Complaint, the service corporations have no staff, no budgets, do not hold annual board meetings and have no real ongoing functions. City Complaint, ¶¶ 13-14 at 7. If these allegations were proven, they would strongly suggest that the service corporations are sham entities. If the service corporations were shams and could be disregarded, then the City would be left as the sole obligor for payment of the debt service on the COPs. This would arguably violate the HRCA.

On the other hand, FGIC and the COPs Holders argued that the doctrines of es-toppel, unjust enrichment and in pari de-licto, and unclean hands bar the City from claiming that the Service Contracts are illegal. At the time of the transaction, the City made several representations and warranties that the City was authorized to enter into the COPs Transaction, that the transaction would be valid and binding and that it did not represent indebtedness. See, e.g., GRS Service Contract 2005, General Terms at § 3.02, in City Complaint, Ex. C. At the time, the City also provided evidence to FGIC and the COPs Holders of its due diligence and legal opinions on these issues. The Detroit City Council also passed ordinances approving the COPs Transaction. See, e.g., FGIC Countercl., ¶ 66 at 21-22, City of Detroit v. Detroit General Retirement System Service Corp., No. 14-04112 (Bankr.E.D.Mich. Jan. 31, 2014) (Dkt. # 129); City of Detroit Ordinance No. 05-05 (Feb. 4, 2005).

To this, the City countered that the insurers and COPs purchasers were aware that the structure of the COPs Transaction was precarious and that the City had reached its debt limit under state law. This information was included in the offering circulars and underwriting agreements provided at the time. See, e.g., 2005 Offering Circular at 5, in City Complaint, Ex. A; Underwriting Agreement 2005 at 2, in Wilmington Trust’s Answer with Affirm. Defenses and Countercl., Ex. 1., City of Detroit v. Detroit General Retirement System Service Corp., No. 14-04112 (Bankr. E.D.Mich. Jan. 31, 2014). (Dkt. #10) Therefore, the City argues, there were no misrepresentations or breaches of warranty-

The outcome of the litigation of these issues is not clear. On balance, the Court finds that the City would have a reasonable likelihood of success on the merits. However, the litigation would likely have taken years, may have affected other parties such as the PFRS and the GRS, and would have been costly, time consuming and distracting for all involved. With these considerations in mind, the Court now turns to the settlements reached with the various parties to the COPs Transaction.

2. The Terms of the COPs Settlement

Class 9 consists of holders and insurers of COPs, including Syncora and FGIC. Each class 9 creditor has settled with the City and has chosen to participate in the class 9 settlement option. Under this settlement, each class 9 creditor will sell all of its claims to a settlement trust. In exchange, they will receive their pro rata share of (1) $97.7 million in New B Notes and (2) the class 9 settlement asset pool. The class 9 settlement asset pool consists *194 of New C Notes and class 9 settlement credits.

The New C Notes have an aggregate amount of $88 million with a twelve-year maturity and bear interest at 5%. Ex. 791. The New C Notes are unsecured obligations; however, the City will segregate certain parking revenues each year in an amount sufficient to pay the annual debt service on the New C Notes. This means that approximately $10 million of parking revenues will be set aside annually in a single general government bank account. Although the New C Notes are due in 2026, the City must prepay them in the event certain parking assets are liquidated or otherwise monetized. In addition, the City may prepay them at any time without penalty or premium.

Settlement credits are credits in the aggregate amount of $25 million and may be used to offset up to 50% of the purchase price of certain eligible City assets. To use the credits, the owner of the credits must participate in the normal procurement or auction process, be the final party selected in such process, and otherwise satisfy all requirements associated with such process. They are assignable and transferable.

Before the class 9 settlements were reached, the City established a litigation trust to hold an amount of New B Notes equal to the total amount of allowed class 9 claims. As a result of the settlements with the class 9 creditors, the City has designated “Excess New B Notes” in the aggregate face amount of approximately $48.71 million. This amount represents the difference between the New B Notes that would have been distributed to class 9 creditors if their claims-had been allowed in full and the amount they are actually receiving as part of the settlements. These additional monies have now been designated for other classes of claims as follows: $42.68 million to the GRS VEBA and the PFRS VEBA in class 12, $17.84 million to the LTGO Bond creditors in class 7, and $4.12 million to the class 14 general unsecured creditors.

The settling class 9 creditors are included as exculpated parties in the plan and they release any claims that they may have against the GRS, the PFRS and each other. However, they do not release their claims against the Swap Counterparties.

3. The Terms of the Syncora Global Settlement

Syncora’s claim against the City is $354 million related to Syncora’s purchase and insurance of COPs. As a settling class 9 creditor, Syncora will receive its pro rata share of New B Notes and the class 9 settlement asset pool. This equates to $23.5 million in New B Notes, $21.3 million in New C Notes and $6.25 million in class 9 settlement credits. Syncora’s recovery is estimated to be 13% of its class 9 claims.

Syncora also asserted certain secured claims and other litigation claims against the City. In settlement of those claims, the City agreed to make an additional $5 million cash payment to Syncora.

Syncora agreed to support the plan and withdraw all objections. In addition, Syn-cora agreed to withdraw all its appeals with prejudice.

Syncora and the City have also entered into a development agreement. Under this agreement, a subsidiary of Syncora (the “Developer”) is granted a five-year option to acquire certain properties owned by the City. If the Developer exercises the option, the Developer has fifteen months to develop the property into parking facilities, residential housing, commercial retail space or any other suitable use that is consistent with the City’s urban planning policies and comprehensive development plan. If the Developer does not begin *195 development of the property within fifteen months after the option is exercised, ownership of the property will revert to the City. The Developer must also complete construction within three years and three months of exercising the option.

The development agreement also' includes a one-year option for the Developer to enter into a thirty-year concession with respect to the parking garage located under Grand Circus Park. If the Developer exercises the option, it will have the right to operate the garage and will also be obligated to invest $13.5 million in capital expenditures within the first five years of assuming garage operations. The settlement contemplates that the Developer will retain all revenues from the parking garage until it has recouped 140% of its capital expenditures. After that, the Developer will be required to pay to the City 25% of the revenues of the garage.

The final component of the Syncora settlement relates to the lease of the Detroit-Windsor Tunnel. Syncora owns the company that currently leases and operates the Detroit side of the tunnel that runs under the Detroit River to Windsor, Ontario (the “Tunnel Company”). By its present terms, that lease expires in November 2020. As part of the settlement, the City agrees to assume the lease and to extend it to December 2040. The lease will also be amended to require the Tunnel Company to maintain the City portion of the tunnel to the same standard as the Windsor portion. This will alleviate the concerns that the City of Windsor has historically expressed with operation of the tunnel. The amended lease will also require additional reporting by the Tunnel Company.

Under the amended lease, the Tunnel Company will be permitted to offset certain capital expenditures made to improve the tunnel against the Tunnel Company’s rent obligations to the City. Through November 2020, the Tunnel Company will be allowed to credit capital expenditures against rent up to the full amount of the rent. During the extension term of the lease, November 2020 through December 2040, the Tunnel Company may credit capital expenditures against up to 75% of the annual rent. However, in no event may the Tunnel Company credit more than $8 million of capital expenditures during the extension term.

4. The Syncora Global Settlement Is Fair and Equitable

The Cohrt finds that the Syncora global settlement is reasonable. Syncora has been one of the fiercest opponents of the City’s plan. Syncora objected to or appealed almost every action by the Court in this case, including approval of the public lighting authority, the post-petition financing, the swaps settlement, and the mediation process itself. Without a settlement with Syncora, there is no doubt that it would have continued to litigate its positions on these issues through the appellate courts.

Even if the City were successful in the litigation with Syncora, it would have spent years and millions of dollars defending the results. Confirmation and the effectiveness of the plan may have been held in limbo as these issues made their way through the appellate process.

If Syncora had been successful in any of its appeals, especially its appeals relating to use of the City’s gaming revenue or to the approval of the post-petition financing, it would have been devastating for the City and would have prevented the City from accessing vital revenue needed for its RRIs. Trial Tr. 70:12-13, Oct. 2, 2014. (Dkt. # 7878)

The settlement avoids the extraordinary time, expense and uncertainty of litigation. *196 It gives the City finality to these many issues and definitive access to its revenues. It allows the City to focus on proposing a more complete plan for confirmation. Id. at 86:1-87:2.

The value of the monetary portion of the settlement is estimated to be 13% of Syn-cora’s class 9 claims. The Court finds that this.aspect of the settlement is well within the range of reasonableness. It is only slightly more than the recovery of general unsecured creditors.

In addition, this aspect of the settlement agreement benefits several other classes of creditors. Because of the settlement, $162 million in New B Notes that would have been held in reserve in a separate COPs litigation trust will be reallocated to the VEBAs, the LTGO Bond creditors, and the general unsecured creditors. This is clearly in the best interests of the City and its creditors.

The Court also specifically approves the development agreement and the assumption and extension of the tunnel lease. Because of these agreements, Syncora assumes a stake in the City’s recovery. In addition, the City gets the benefit of improved management of the DetroiL-Windsor Tunnel. If Syncora exercises its option, it will also be obligated to make desperately needed capital expenditures to the Grand Circus parking garage and to develop vacant city-owned properties.

The City presented credible evidence from James Doak, an expert from Miller Buekfire & Co., an investment banking firm retained by the City, that the business aspects of the Syncora settlement are a reasonable exercise of the City’s business judgment. Trial Tr. 117:10-120:25, Oct. 3, 2014. (Dkt. # 7894) The Court so finds.

Therefore, the Court finds that the Syn-cora settlement is well within the reasonable range of settlements and approves it.

5. The Terms of the FGIC Global Settlement

The City and FGIC, on behalf of itself and the COPs Holders, have also entered into a settlement agreement. Under the class 9 settlement option, FGIC will receive $74.2 million in New B Notes, $67.2 million in New C Notes and $19.75 million in class 9 settlement credits. This represents roughly 13% of FGIC’s class 9 claims. FGIC and the COPs Holders will divide the consideration provided under the class 9 settlement option under terms agreed upon between them.

In exchange, FGIC and the COPs Holders have withdrawn their objections to the plan and are deemed to have voted in favor of the plan.

As part of the settlement, the parties agree to dismiss the COPs litigation. FGIC also agrees to waive any and all claims it may have against any other party, including the GRS and the PFRS related to the COPs litigation.

In addition to FGIC’s share of the class 9 settlement option, FGIC and the City will enter into a development agreement for the Joe Louis Arena site. Under this agreement, an entity to be formed and controlled by FGIC and the COPs Holders will have the option to acquire and develop the land upon which Joe Louis Arena and its garage currently sit. The City will demolish the structures on the land and perform any necessary environmental remediation.

Within thirty-six months after exercising the option, the new entity must prepare a comprehensive development plan for the site. If the City approves development plan, the City and the new entity must close on the sale of the parcels within two *197 years of that approval, or within six months of completion of the demolition of the structures, whichever is later. The State has agreed to reimburse the new entity for eligible project costs and tax increment financing incentives. The City has also agreed to zone the property such that certain tax abatements will be available. The new entity is required to have the development substantially completed within thirty-six months after closing on the sale of the structure.

FGIC also has claims against the City relating to the swap agreements. In settlement of those claims, FGIC will have an allowed class 14 claim for $6.11 million. In addition, the Downtown Development Authority will assign to FGIC its right, title and interest to its distribution of New B Notes under the plan on account of its $83.6 million class 13 claim. The City estimates that FGIC will receive approximately $4.5 million in New B Notes in settlement of its swap-related claims.

6. The FGIC Global Settlement Is Fair and Equitable

FGIC holds one of the largest claims against the City and it has zealously litigated its objections. The COPs litigation involved highly complex and novel issues that would have taken significant time and expense to resolve. As with Syncora, FGIC’s estimated monetary recovery is 13% of its class 9 claims. This is comparable to what the general unsecured creditors are receiving. Accordingly, the Court readily finds that this aspect of the settlement is reasonable.

In addition, the Joe Louis Arena development agreement is of incalculable value to the City. The City has presented credible evidence that the Joe Louis Arena is currently considered a liability because of the cost of removing the existing structures and the necessary environmental remediation. Trial Tr. 135:14-20, Oct. 21, 2014. (Dkt. # 8098) This evidence has not been contradicted and the Court accepts it. Because of this agreement, land that might have stood vacant and unused will become a shining demonstration of Detroit’s recovery..

Accordingly, the Court finds that the Joe Louis Arena development agreement is reasonable and approves it.

IV. Settlements That the Court Approved During the Case

During the case, pursuant the requests of the City, the Court approved settlements with the Swap Counterparties, the Ad Hoc Committee of DWSD Bondholders and the Macomb Interceptor Drain Drainage District (“MIDDD”).

A. The Swaps Settlement

The Swap Counterparties settled their claims of approximately $288 million arising from the termination of the interest rate swap agreements that related to the COPs Transaction. 10 The settlement gives these creditors, a secured claim for $85 million, to be paid upon the effective date of the plan from the City’s exit financing. In exchange, these creditors withdrew their objections to the plan and agreed to support it.

*198 This settlement was significant because it was the first settlement with any of the City’s creditors and because it created an impaired accepting class, as required for plan confirmation under § 1129(a)(10). Because the plan could then be confirmed over the dissent of other impaired classes (assuming the other confirmation requirements were met), this settlement paved the way for further settlements with other classes of impaired creditors. It also gave the City continued access to its gaming tax revenue, which these creditors, along with the swap insurers, had sought to bar through litigation.

On April 15, 2014, the Court approved the settlement, finding that it was reasonable in amount and overruling Syncora’s objection that it violated its rights under the various COPs and swap agreements. (Dkt. #4094) This settlement is incorporated into the treatment of class 5 in the plan.

B. The DWSD Bondholders Settlement

The DWSD bondholders settlement, reached in early August 2014, involved a tender offer for all existing DWSD bonds in the amount of $5.3 billion, resulting in a restructuring of the debt and substantial interest cost savings for the City. It also included $190 million in needed capital improvement financing.

By the time that this settlement was reached, the impaired class of these bondholders, class 1A, had voted to reject the plan. Many bondholders had also objected to the plan on several grounds, including that the plan is not fair and equitable because it does not give the bondholders the present value of their claims, imper-missibly modifies the call protections of existing bonds, and does not provide them indubitable equivalent value.

By this settlement, these plan objections were resolved and the claims were left unimpaired. On August 11, 2014, the City filed a motion to approve this secured financing and to approve the settlement. (Dkt. # 6644) On August 22, 2014, the City announced the success of the tender offer in the market. (Dkt. # 6989) On August 25, 2014, following a hearing, the Court granted the City’s motion. (Dkt. # 7028) The settlement was incorporated into the City’s sixth amended plan filed on August 20,2014. (Dkt. #6908)

C. The MIDDD Settlement

The settlement with MIDDD resolved its plan objections and the City’s objection to MIDDD’s proof of claim. MIDDD’s claim was a complex fraud claim asserting that the City intentionally misrepresented the amount of the expenses that MIDDD had reimbursed to the City for repairing a collapsed water line. By stipulation filed on October 16, 2014, the settlement fixed the claim at $22 million, provided for its treatment in class 14 as a general unsecured claim, and obligated MIDDD to withdraw its plan objections. (Dkt. # 7987) On October 20, 2014, following a hearing, the Court approved the settlement. (Dkt. # 8025)

V. The Creation of the Great Lakes Water Authority

Another major achievement in the case is the mediated agreement that the City entered into with Wayne, Oakland and Ma-comb Counties for the creation of the Great Lakes Water Authority. These counties and their customers obtain their water and sewer services from the Detroit Water and Sewerage Department (“DWSD”). By this agreement, the assets of the DWSD will be governed by representatives of the region that it serves. In exchange, the GRS pension plan will be paid $428.5 million as DWSD’s share of the City’s unfunded pension liability and for its share of restructuring expenses and pro *199 fessional fees. Although this agreement resulted in the counties’ withdrawal of their objections to the plan and involved the transfer of City assets, the City exercised its right under § 904 not to request Court approval of this memorandum of understanding. 11

VI. The Classes op Claims in the City’s Plan and the Results of the Balloting

In the City’s plan, classes 1-5 are secured and classes 7-17 are- unsecured. Class 6 has already been paid.

Secured classes 1-4 are unimpaired and therefore, under § 1126(f), are deemed to have accepted the plan. These claims are:

• Class 1A — All Classes of DWSD Bond Claims

• Class IB — All Classes of DWSD Revolving Sewer Bond Claims

• Class 1C — All Classes of DWSD Revolving Water Bond Claims

• Class 2A — Secured GO Series 2010 Claims

• Class 2B — Secured GO Series 2010(A) Claims

• Class 2C — Secured GO Series 2012(A)(2) Claims

• Class 2D — Secured GO Series 2012(A2-B) Claims

• Class 2E — Secured GO Series 2012(B) Claims

• Class 2F — Secured GO Series 2012(B2) Claims

• Class 3 — Other Secured Claims

• Class 4 — HUD Installment Notes Claims

Class 5 consists of swap claims arising from the COPs Transaction. These claims are secured but impaired. The amount and treatment of these claims is the result of the Court-approved Swaps Settlement, described in part IV.A. above. The class accepted the plan by 100% (two votes).

The classes of unsecured claims are impaired. Classes 7 through 13 and 17 settled their objections to confirmation and accepted the plan. The Court approved these settlements in part III above. Classes 14 and 15 rejected the plan. Class 16 is deemed to have rejected the plan under § 1126(g). The classes and the results of the balloting are:

• Class 7 — LTGO Bond Claims accepted by 62.98% in number, 83.39% in amount.

• Class 8 — UTGO Bond Claims accepted by 87.26% in number, 97.35% in amount.

• Class 9- — COPs Claims accepted by 92.50% in number and 96.61% in amount.

*200 • Class 10 — PFRS Pension Claims accepted by 82.17% in number, 82.10% in amount.

• Class 11 — GRS Pension Claims accepted by 73.15% in number, 72.94% in amount.

• Class 12 — OPEB Claims accepted by 88.25% in number, 84.62% in amount.

• Class 13 — Downtown Development Authority Claims accepted by 100% in number and amount (one vote).

• Class 14 — Other Unsecured Claims rejected by 51.05% in number, 57.49% in amount.

• Class 15 — Convenience Claims rejected by 55.26% in number, 57.92% in amount.

• Class 16 — Subordinated Claims are deemed to have rejected.

• Class 17 — Indirect 36th District Court Claims accepted by 100%. (Dkt. ## 6179, 6665 and 8072)

VII. The Statutory Requirements for Chapter 9 Plan Confirmation

Section 943(b) provides:

The court shall confirm the plan if—

(1) the plan complies with the provisions of this title made applicable by sections 103(e) and 901 of this title;

(2) the plan complies with the provisions of this chapter;

(3) all amounts to be paid by the debtor or by any person for services or expenses in the case or incident to the plan have been fully disclosed and are reasonable;

(4) the debtor is not prohibited by law from taking any action necessary to carry out the plan;

(5) except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the plan provides that on the effective date of the plan each holder of a claim of a kind specified in section 507(a)(2) of this title will receive on account of such claim cash equal to the allowed amount of such claim;

(6) any regulatory or electoral approval necessary under applicable nonbank-ruptcy law in order to carry out any provision of the plan has been obtained, or such provision is expressly conditioned on such approval; and

(7) the plan is in the best interests of creditors and is feasible.

11 U.S.C. § 943 (b). 12

Section 901 provides, “Sections ... 1129(a)(2), 1129(a)(3), 1129(a)(6), 1129(a)(8), 1129(a)(10), 1129(b)(1), 1129(b)(2)(A), 1129(b)(2)(B) ... of this title apply in a case under this chapter.” 13

In pertinent part, § 1129 provides:

*201 (a) The court shall confirm a plan only if all of the following requirements are met:

(2) The proponent of the plan complies with the applicable provisions of this title.

(3) The plan has been proposed in good faith and not by any means forbidden by law.

(6) Any governmental regulatory commission with jurisdiction, after confirmation of the plan, over the rates of the debtor has approved any rate change provided for in the plan, or such rate change is expressly conditioned on such approval.

(8) With respect to each class of claims or interests—

(A) such class has accepted the plan; or

(B) such class is not impaired under the plan.

(10) If a class of claims is impaired under the plan, at least one class of claims that is impaired under the plan has accepted the plan, determined without including any acceptance of the plan by any insider.

(b)(1) Notwithstanding section 510(a) of this title, if all of the applicable requirements of subsection (a) of this section, other than paragraph (8) are met with respect to a plan, the court, on request of the proponent of the plan, shall confirm the plan notwithstanding the requirements of such paragraph if the plan does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted, the plan.

(2) For the purpose of this subsection, the condition that a plan be fair and equitable with respect to a class includes the following requirements:

(A) With respect to a class of secured claims, the plan provides—

(i)(I) that the holders of such claims retain the liens securing such claims, whether the property subject to such liens is retained by the debtor or transferred to another entity, to the extent of the allowed amount of such claims; and

(II) that each holder of a claim of such class receive on account of such claim deferred cash payments totaling at least the allowed amount of such claim, of a value, as of the effective date of the plan, of at least the value of such holder’s interest in the estate’s interest in such property;

(ii) for the sale, subject to section 363(k) of this title, of any property that is subject to-the liens securing such claims, free and clear of such liens, with such liens to attach to the proceeds of such sale, and the treatment of such liens on proceeds under clause (i) or (iii) of this sub-paragraph; or

(in) for the realization by such holders of the indubitable equivalent of such claims.

(B) With respect to a class of unsecured claims—

(i) the plan provides that each holder of a claim of such class receive or retain on account of such claim property of a value, as of the effective date of the plan, equal to the allowed amount of such claim; or

(ii) the holder of any claim or interest that is junior to the claims of *202 such class will not receive or retain under the plan on account of such junior claim or interest any property, except that in a case in which the debtor is an individual, the debtor may retain property included in the estate under section 1115, subject to the requirements of subsection (a)(14) of this section.

11 U.S.C. § 1129 .

The City bears the burden of establishing each of the required elements for confirmation of its plan by a preponderance of the evidence. In re Bamberg Cnty. Mem’l Hosp., No. 1103877, 2012 WL 1890259 , at *4 (Bankr.D.S.C. May 23, 2012); In re Pierce Cnty. Hous. Auth., 414 B.R. 702, 715 (Bankr.W.D.Wash.2009); In re Mount Carbon Metro. Dist., 242 B.R. 18, 31 (Bankr.D.Colo.1999).

Moreover, “the court has an independent obligation to determine that a proposed plan meets the confirmation requirements of § 943(b), notwithstanding creditor approval.” Prime Healthcare Mgmt. Inc. v. Valley Health Sys. (In re Valley Health Sys.), 429 B.R. 692 , 710 n. 45 (Bankr.C.D.Cal.2010).

VIII. The Court’s Findings Regarding Confirmation of the City’s Eighth Amended Plan of Adjustment

Regarding confirmation of the eighth amended plan of adjustment, the Court specifically finds:

1. The plan complies with the provisions of title 11 that are made applicable in chapter 9 by §§ 103(f) and 901.

2. Each of the claims in each class is substantially similar to the other claims in the class, as required by § 1122(a).

3. Class 15, the class of convenience claims consisting only of every unsecured claim that is less than or reduced to $25,000, is approved as reasonable and necessary for administrative convenience, as required by § 1122(b).

4. The plan complies with the “contents of plan” requirements of § 1123(a)(l)-(5), (b), and (d).

5. The classes of claims that the plan designates as unimpaired, classes 1 through 4, are unimpaired under § 1124.

6. The City complied with the “post-petition disclosure and solicitation” requirements of § 1125.

7. The plan complies with the provisions of chapter 9 of title 11 of the United States Code, as required by § 943(b)(2).

8. All amounts paid or to be paid by the City for services or expenses in the case or incident to the plan will be fully disclosed and reviewed for reasonableness as soon as practicable, as required by § 943(b)(3).

9. The debtor is not prohibited by law from taking any action necessary to carry out the plan, as required by § 943(b)(4).

10. Except to the extent agreed, the plan provides that on the effective date of the plan, each holder of a claim specified in § 507(a)(2) will receive cash equal to the allowed amount of the claim, as required by § 943(b)(5).

11. Any regulatory or electoral approval necessary under applicable non-bankruptcy law in order to carryout any provision of the plan has been obtained, as required by § 943(b)(6).

12. The plan is in the best interests of creditors, as required by § 943(b)(7).

*203 13. The plan is feasible, as required by § 943(b)(7).

14. The City has complied with the applicable provisions of title 11, as required by § 1129(a)(2).

15. The plan has been proposed in good faith, as required by § 1129(a)(3).

16. The plan has not been proposed by any means forbidden by law, as required by § 1129(a)(3).

17. Any governmental regulatory commission with jurisdiction, after confirmation of the plan, over the rates of the debtor has approved any rate change provided for in the plan, or such rate change is expressly conditioned on such approval, as required by § 1129(a)(6).

18. All classes accepted the plan under § 1126 except class 14 (other unsecured claims), class 15 (convenience claims), and class 16 (subordinated claims). Therefore the requirement of § 1129(a)(8) that each impaired class has accepted the plan is not met. However, the plan meets the alternative requirements of § 1129(b).

19. At least one class of claims that is impaired under the plan has accepted the plan, determined without including any acceptance of the plan by any insider, as required by § 1129(a)(10).

20. The plan does not discriminate unfairly with respect to rejecting classes 14 and 15 (the other unsecured claims and the convenience claims), as required by § 1129(b)(1).

21. The plan is fair and equitable with respect to classes 14 and 15, as required by § 1129(b)(1).

Accordingly, the Court confirms the City’s eighth amended plan of adjustment.

IX. The Outstanding Objections to the City’s Plan

A. Objections Filed by Represented Parties

Because of the settlements, the only remaining objections to the plan that represented parties filed are the objections of creditors with claims under 42 U.S.C. § 1983 and the objections of creditors with claims under the Takings Clause of the Fifth Amendment to the United States Constitution. Both groups assert that because their claims are based in the Constitution, their claims cannot be discharged in bankruptcy. These objections are addressed in part X. J. below.

B. Objections Filed by Unrepresented Parties

Unrepresented parties filed 836 timely objections to confirmation. These objections were thoughtful, articulate, sincere and substantive., The Court has attempted to summarize these objections with language that both captures the essence of the objections and appropriately speaks to the statutory requirements for chapter 9 plan confirmation:

1. The ASF recoupment is improper.

2. The plan is not in thq best interests of creditors.

3. The plan unfairly discriminates.

4. The plan violates § 1123(a)(4) by providing different treatment among class 11 creditors.

5. The plan is not feasible.

6. The plan violates the funding clause of the Michigan constitution because it does not require the City to make up missed payments to the pension fund if outside funding does not happen.

*204 7. The City did not provide adequate notice of amended plans and disclosure statements, objection deadlines, or voting rights.

8. The due process rights of creditors have been violated by the Court’s haste in this entire process.

9. The plan impairs pension holders’ claims against the retirement systems.

10. The DWSD and library pensions were fully funded so they should not be impaired.

11. The vote solicitation and balloting procedures were unlawful and unfair.

12. The plan’s third-party release provisions are improper.

13. The plan improperly offers a higher recovery to classes 10 and 11 if they vote in favor of the plan.

14. The UTGO settlement violates state law.

15. The plan violates the Blighted Area Rehabilitation Act ( Mich. Comp. Laws §§ 125.71-125.84 ).

16. The Grand Bargain is an improper use of tobacco settlement money.

17. The plan violates the Federal Transit Act ( 49 U.S.C. § 5333 (b)) with respect to DDOT employees.

18. The pension underfunding is overstated and therefore the pensions are improperly impaired.

19. The use of a 6.75% discount rate in the pension settlement is improper.

X. Issues Relating to Plan Confirmation

In this section, the Court addresses the confirmation issues and requirements that it concludes require discussion. The Court overrules all other objections without further discussion.

A. The City’s Professional Fees Will Be Fully Disclosed and Reviewed for Reasonableness As Soon As Practicable, As Required by § 943(b)(3)

Section 943(b)(3) requires that “all amounts to be paid by the debtor or by any person for services or expenses in the case or incident to the plan have been fully disclosed and are reasonable.”

Section 943(b)(3) is clear in its requirement that the City’s professional fees be fully disclosed. As discussed below, however, § 943(b)(3) is not clear on the extent to which it requires that the City’s professional fees are reasonable.

1. The City’s Professional Fees Will Be Fully Disclosed

The Court concludes that all amounts to be paid by the debtor for services or expenses in the case or incident to the plan will be fully disclosed.

On August 19, 2013, the Court entered an order appointing a fee examiner, (the “Fee Examiner Order”) (Dkt. # 383) That order requires the fee examiner “to assure the Court, the City, the creditors, and the public that the City’s Professional Fee Expenses are fully disclosed and are reasonable, as required by § 943(b)(3).” Id. at ¶ 3. Under the Fee Examiner Order, “Professional Fee Expenses” are defined to include “professional compensation and reimbursement of expense obligations ... that the City incurs in connection with this case whether payable to professionals employed by the City or by others.” Id. at ¶ 2.

The Fee Examiner Order was followed by an order on September 11, 2013, establishing the process by which the fee examiner would review fees, (the “Fee Review Order”) (Dkt. # 810) The Fee Review Order requires the professionals whose fees the City must pay to submit detailed *205 monthly fee statements to the fee examiner. The examiner then responds to the professionals with a preliminary report regarding the reasonableness of the fees. The professionals and the examiner then meet and confer in an effort to resolve any issues regarding the fees. Thereafter, the fee examiner files quarterly reports disclosing the fees and stating whether the fees were fully disclosed and reasonable under § 943(b)(3). These reports are then posted on the Emergency Manager’s website. If the fee examiner finds that the fees were not reasonable, the affected professional can bring the issue before the Court.

On May 29, 2014, the Court entered an Order Amending and Clarifying Fee Review Order of September 11, 2013. (the “DWSD Trustee Fee Order”) (Dkt. # 5150) The DWSD Trustee Fee Order clarifies that “[a]ll fees and expenses of the professionals retained by, and the employees of, U.S. Bank National Association in its capacity as Trustee ..., to provide services in connection with the City’s Bankruptcy case, shall be subject to review by the Fee Examiner under the Fee Review Order of September 11, 2013.” 14

Pursuant to these orders, the fee examiner has filed quarterly reports that have fully disclosed the City’s Professional Fee Expenses through June 2014. These include:

• Fee Examiner’s Quarterly Report for Months of July, August and September 2013, filed February 4, 2014 (Dkt. # 2642);

• Fee Examiner’s First Supplemental Quarterly Report for Months of July, August and September 2013, filed April 1, 2014 (Dkt. # 3457);

• Fee Examiner’s Second Quarterly Report for Months of October, November and December 2013, filed May 6, 2014 (Dkt. # 4498);

• Fee Examiner’s Third Quarterly Report for Months of January, February and March 2014, filed August 5, 2014 (Dkt. # 6528);

• Fee Examiner’s First Supplemental Quarterly Report for Months of January, February and March 2014, filed September 8, 2014 (Dkt. # 7332);

• Fee Examiner’s Second Supplemental Quarterly Report for Months of July, August and September 2013, filed September 18, 2014 (Dkt. # 7574);

• Fee Examiner’s First Supplemental Quarterly Report for Months of October, November and December 2013, filed September 18, 2014 (Dkt. #7575); and

• Fee Examiner’s Fourth Quarterly Report for Months of April, May and June 2014, filed November 5, 2014 (Dkt. # 8186).

Subsequently, the Court entered an order requiring the City to fully disclose all of its professional fees in the case through the effective date of the plan. (Dkt. # 8710)

2. Section 943(b)(3) Requires the Court to Determine Whether the City’s Professional Fees in the Case Are Reasonable

As a condition of plan confirmation, § 943(b)(3) further requires that these amounts for services or expenses in the case or incident to the plan are “reasonable.” In chapter 11, the court’s authority and obligation to review professional fees is firmly established in § 330 of the bankruptcy code. Cupps & Garrison, LLC v. *206 Rhiel (In re Two Gales, Inc.), 454 B.R. 427, 432-33 (6th Cir. BAP 2011); In re Busy Beaver Bldg. Ctrs., Inc., 19 F.3d 833 (3d Cir.1994). However, § 330 is omitted from the list of sections identified in § 901 that apply in chapter 9. As a result, the professionals in the case have not filed applications for the award of fees under § 330.

It is not readily apparent how to reconcile the fee reasonableness requirement of § 943(b)(3) with the inapplicability of § 330 in chapter 9. The Court therefore requested interested parties to brief this issue.

The City’s brief asserts that § 943(b)(3) is satisfied by the fee examiner’s findings that the fees disclosed are reasonable, together with the opportunity that the process establishes for any party to seek further review by the Court. It further argues that because of § 904 and the Tenth Amendment, the Court’s role in reviewing fees should be more limited and circumspect than in a chapter 11 case. (Dkt. # 6842)

The retiree committee restates the City’s argument and also makes a broader argument. It asserts that under § 943(b)(3), only those fees remaining “to be paid” upon confirmation are subject to the reasonableness requirement, not the fees that the City paid during the case.

Two issues are raised here:

(1) Does § 943(b)(3) of the bankruptcy code require that all of the City’s professional fees be reasonable or only those fees that remain unpaid at the moment of confirmation?

(2) Should the Court accept, without further review, the fee examiner’s findings that the fees have been reasonable?

For the reasons set forth below, the Court concludes that § 943(b)(3) does require that all of the City’s professional fees in connection with the case be reasonable. The Court further concludes that it is not appropriate to accept, without further judicial review, the fee examiner’s findings that the fees have been reasonable.

a. The Scope of § 943(b)(3)

No case has closely analyzed the specific question of whether § 943(b)(3) requires that the reasonableness of all of the City’s professional fees be reviewed or only those fees that remain unpaid at the moment of confirmation. The practices and procedures that the courts have followed appear to have split on the question. The majority of the decisions have adopted the practice of reviewing all fees. For example, in In re Barnwell County Hospital, 471 B.R. 849 (Bankr.D.S.C.2012), the court stated in its opinion and order confirming the plan, entered on May 23, 2012:

As set forth in the Disclosure Statement, the Debtor disclosed the amounts paid to professionals due and owing as of February 28, 2012. Thereafter, counsel submitted an update of the amounts paid and due through March 31, 2012. There have been no objections to the Plan based upon these disclosures. The foregoing amounts are reasonable and necessary to effectuate the Plan and reorganization in this complex case, and thus § 943(b)(3) is satisfied.

Id. at 868. See also Bamberg Cnty. Mem’l Hosp., 2012 WL 1890259 , at *7 (decision by the same judge and entered on the same date).

Similarly, in In re Colorado Centre Metropolitan District, 139 B.R. 534, 535 (Bankr.D.Colo.1992), the court stated, “In a Chapter 9, the Court must determine if the fees paid by the Debtor or any person have been fully disclosed and are reasonable.” See also In re East Shoshone Hosp. Dist., 226 B.R. 430, 433 *207 (Bankr.D.Idaho 1998) (“§ 943(3) requires as a condition of confirmation that all amounts paid by debtor for services or expenses in the case or incident to the plan have been (1) disclosed and (2) are reasonable.”); In re Sanitary & Improvement Dist. No. 7 of Lancaster Cnty., Neb., 96 B.R. 966, 967 (Bankr.D.Neb.1989) (“Sections 943(b)(3) and (b)(5) permit this Court to confirm a plan if the Court determines •administrative expenses to be reasonable and if the plan provides for payment on. the effective date of all administrative expenses.”).

On the other hand, some decisions appear to review the reasonableness of only unpaid fees. One example here is In re Corcoran Hospital District, 233 B.R. 449 (Bankr.E.D.Cal.1999):

The debtor has agreed that “after confirmation, the Debtor will seek to pay its attorneys and Committee counsel compensation and reimbursement in an amount and on a schedule to be approved by the Court. The Debtor will not make any final payments to either counsel without a finding from the Court that such payment is reasonable; therefore it is unnecessary to make a finding of reasonableness at this time.” Thus, this requirement of § 943(b)(3) is met, provided that the order confirming the Plan shall contain language consistent with the debtor’s representation.

Id. at 452-53 (footnote omitted); see also Connector 2000 Ass’n, Inc., 447 B.R. at 764-65 . Interestingly, these two decisions were by the same judge that decided In re Barnwell County Hospital and In re Bamberg County Memorial Hospital, cited above. 15

*208 The plain language of § 943(b)(3) requires only that fees “to be paid” must be reasonable. The argument that the plain language of the statute should be applied is always strong. Lamie v. U

This text is long and has been trimmed here. Open the source document for the complete record.