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
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)