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Law professor/bankruptcy expert weighs in on Detroit's settlement with major objecting creditor
October 16, 2014
Detroit has reached a settlement with its last major holdout creditor in bankruptcy court. Bond insurer Financial Guaranty Insurance Corporation (FGIC) holds $1.1 billion in Detroit debt. By signing onto the plan of adjustment Detroit has proposed to restructure its debts, it's removed another hurdle slowing down the city's exit from bankruptcy. This deal should shorten the remainder of the trial and push Detroit closer to exiting bankruptcy, according to Wayne State University law professor Laura Bartell. "It just makes it much easier if [FGIC is] on board," Bartell said. Bartell suggests it also removes another potential hurdle down the road, should Judge Steven Rhodes approve the plan of adjustment: "FGIC was really the only creditor left with deep enough pockets to pursue an appeal," she said.