Detroit’s plan to end backfiring interest-rate hedges taken on almost a decade ago is its first step back to the municipal bond market even as investors gird for a return of pennies on the dollar to current holders.
Detroit’s bankruptcy trial ended yesterday without a ruling from the judge on whether the city can remain under court protection, where creditors are limited in what they can do to challenge the city’s restructuring process.
Detroit, struggling to provide its 700,000 residents with basic services, was sued by retired workers including police and firefighters who are seeking to block the bankrupt city from unilaterally cutting their health- care benefits.
The Los Angeles Dodgers and Major League Baseball attacked each other in court over competing $150 million loan proposals, with baseball Commissioner Bud Selig accusing team owner Frank McCourt of trying to break the rules that keep the league together.
Detroit faced a “payless payday” before it filed its $18 billion bankruptcy, a financial analyst told the judge conducting a trial to determine whether the city should be stripped of court protection from creditors.
Jefferson County, Alabama, officials shouldn’t worry that a bankruptcy filing will damage their ability to borrow money in the future, said lawyers who guided other municipalities through two of the biggest court-supervised restructurings. The markets will forget, they said.