March 17, 2014

Bond insurer says Detroit knew better when it agreed to $1.4-billion debt deal in 2005

Over at The Detroit Free Press -
"One of the major bond insurers that backed a controversial debt Detroit took on during the Kilpatrick administration asked the federal judge overseeing Detroit’s bankruptcy Monday to allow it to intervene in the city’s legal bid to wipe out the debt.

In January, Detroit sued in bankruptcy court against two quasi-legal subsidiaries called service corporations and two trusts created by the city and its two pension funds to handle a complex deal brokered in 2005 and 2006.

That arrangement slashed Detroit’s unfunded pension liabilities but later backfired and was called one of the bigger factors pushing the city into bankruptcy."

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