Detroit Reaches Key Deal That May Speed Bankruptcy Exit
By Steven Church and Joel Rosenblatt Sep 10, 2014 11:23 AM ET
Detroit and bond insurer Syncora Guarantee Inc. reached a agreement to end their battle over the city’s $7 billion debt-reduction program that may speed the biggest U.S. municipal reorganization to a quick conclusion.
U.S. Bankruptcy Judge Steven Rhodes gave Detroit and Syncora until Sept. 15 to work out final details of the accord, which would boost the bond insurer’s recovery beyond the 10 cents on the dollar the city had offered. Until then, the trial on the fairness of the entire debt-cutting plan is on hold.
Under the settlement, the city would give New York-based Syncora new debt, renew a lease on a tunnel to Canada that the bond insurer controls, turn over a parking structure and give an affiliate of the company land for development. The agreement increases the pressure on bond insurer Financial Guaranty Insurance Co., the last major creditor still battling the city, said lawyers who are following the case but not involved.
“There’s certainly a ‘train has left the station’ and ‘last man standing’ feeling about this,” bankruptcy attorney Mark Berman said in an e-mail.
Alfredo Perez, an attorney for FGIC, told Rhodes at a hearing today that he’s having “hard time” understanding the complicated agreement.
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