* City says it has deal with some creditors
* Details of agreement still undisclosed
By Hilary Russ
July 15 The nearly bankrupt city of Detroit
disclosed in a court filing on Monday that it agreed to dissolve
a court order blocking bond insurer Syncora Guarantee from
limiting the city's access to millions of dollars of monthly
casino tax revenue.
The insolvent city sued Syncora earlier this month after the
insurer allegedly told U.S. Bank, which controls the casino
funds that were used as collateral in negotiations with
creditors, not to release up to $11 million a month to Detroit,
the suit claims.
The city won a temporary restraining order that barred
Syncora from interfering with Detroit's access to the revenue.
Detroit and its state-appointed emergency manager, Kevyn
Orr, notified Syncora on Friday that they were willing to lift
the order, according to Monday's court filing.
That same day, the city reached in principal "an important
settlement" with unidentified creditors that is expected to be
executed later on Monday, the city's court filing said.
The names of creditors and details of the settlement,
revealed about a month after Orr laid out a hard-nosed plan to
restructure the city's debt, were not disclosed.
Until now, Detroit's only publicly known creditor deal has
been an agreement in principal to end swap contracts with
counterparties UBS AG and SBS Financial Products Company without
having to pay a more than $340 million termination fee.
An attorney for the city referred reporters to a spokesman
for Orr, who did not respond to questions about the settlement.
A Syncora spokesman did not immediately reply to a request for
In its lawsuit against Syncora, the city claimed that the
insurer interfered with Detroit's efforts to reach the deal on
terminating interest rate swap contracts by blocking the release
of the casino tax revenue.
The city said those funds were part of ongoing discussions
with creditors UBS and Bank of America Merrill Lynch and sought
to have the funds released.
With the city in desperate need of cash and the threat of
bankruptcy looming, Orr announced in June that it would stop
paying on $11.5 billion of unsecured debt, starting with a
default on $1.45 billion of pension obligation certificates of
participation. Orr also said he considers about $641 million of
general obligation debt, including $410 million of unlimited tax
bonds, to be unsecured.
At the same time, Orr proposed that all unsecured creditors
would receive a pro rata share of $2 billion of notes the city
would issue and pay off as its financial circumstances improve.
Syncora covered $24.7 million of the $35.26 million of
combined payments due last month on the city's pension debt as a
result of the default.
A bankruptcy filing for Detroit, which has around 700,000
residents, would represent the largest municipal bankruptcy in
U.S. history, far surpassing Alabama's Jefferson County and
Orange County in California.