April 9 Detroit has reached a settlement with bond insurers over the treatment of some bonds in the city's bankruptcy, and a court-appointed mediator is expected to announce the details later on Wednesday, a spokesman for the city said.
William Nowling, spokesman for Detroit emergency manager Kevyn Orr, did not provide details of the settlement, including whether the deal covered all litigants.
Bond insurers National Public Finance Guarantee Corp., a unit of MBIA Inc. ; Assured Guaranty Municipal Corp., a unit of Assured Guaranty Ltd. ; and Ambac Assurance Corp., a unit of Ambac Financial Group Inc., sued Detroit in November. They claimed Detroit was illegally diverting voter-approved property taxes to the general fund.
The city's proposed plan of adjustment in its historic Chapter 9 bankruptcy case would give investors of $374.6 million in unlimited tax general obligation bonds as little as 15 cents on the dollar. As most bondholders have insurance, the insurers must cover their losses.
Spokespersons for the three bond insurers did not respond to emails seeking comment on the deal. (Reporting by Dan Burns; Editing by Bernadette Baum)