Detroit Bankruptcy Plan Threatened by One Creditor's Objection

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/ Source: Associated Press

There's a fly in the ointment that could stall Detroit's progress out of bankruptcy. A major creditor is objecting to the city's debt restructuring plan, saying it should be scrapped before trial, which is slated to begin next week. Bond insurer Syncora Guarantee said in a court filing Tuesday that the plan put together by state-appointed emergency manager Kevyn Orr and attorneys hired by the city is unfair, will be too costly to defend, and will ultimately fail. The trial is set to start Aug. 21, just over a year since Detroit, saddled with more than $18 billion in debt, filed for protection in the biggest municipal bankruptcy in U.S. history. Syncora is challenging a court-mediated agreement between the state, corporations and foundations that promises $800 million for pensions while staving off the sale of city-owned art to satisfy creditors. Syncora's claim is about $400 million. Its objection says mediators "acted improperly by orchestrating a settlement that alienates the city's most valuable assets for the sole benefit of one creditor group."


- The Associated Press