Wednesday, Detroit said it reached a settlement with three bond insurers over the treatment of voter-approved general obligation bonds.
As part of that settlement, the insurers agreed to vote in support of the city's debt adjustment plan, as well.
Rounding up support for the restructuring plan from the banks and insurers could ultimately ease the way for the city to exit bankruptcy. If enough creditors approve the plan, then Detroit could force its terms on the creditors who object to it.
Rhodes concluded that objections by bond insurer Syncora Guarantee, European banks that own some of the pension debt, the city's retired workers, and others lacked merit.
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Those objecting had said the investment banks would fare better than Detroit's other creditors who face steeper losses in the bankruptcy case. Creditors also questioned the legality of a lien on casino tax revenue that Detroit granted to the banks in 2009 to stop them from forcing the city to pay as much as $400 million to end the swaps.
Detroit will pay the $85 million to the banks over time, ultimately freeing up the casino revenue for critical city improvements and services. The previous settlements rejected by the judge had been much higher, at $230 million and $165 million.
A court spokesman says federal Judge Steven Rhodes will render his decision Friday morning on the city's agreement to pay $85 million to UBS and Bank of America.
Rhodes has denied earlier proposals for $220 million and $165 million settlements.