Detroit faces a long legal fight over its valuable art collection and other key matters in its historic bankruptcy case that make it imperative to push back the start of a trial on the city's debt adjustment plan, a bond insurer argued on Friday.
In a filing in U.S. Bankruptcy Court, Syncora Guarantee Inc warned that lawsuits will be filed over the Detroit Institute of Arts' collection, which the city is not selling at this point to help pay its $18 billion in debt.
Syncora, which guaranteed payments on some of Detroit's bonds, and other creditors have pushed for the sale of art works to raise more cash for the city to spread among its thousands of creditors, who face steep losses in the largest municipal bankruptcy in U.S. history.
(Read more: Stories about Detroit's crisis)
In an effort to prevent a fire sale of art, a group of philanthropic foundations, the art museum and Michigan Governor Rick Snyder have pledged about $815 million to ease pension cuts for city retirees.
Prior to those pledges, auction house Christie's in December appraised the value of Detroit-owned works at the institute at $454 million to $867 million. But critics of Christie's work suggested that the appraisal of only a small slice of Detroit's collection undervalued the art collection as a potential asset in helping to resolve Detroit's bankruptcy.
"Given the city's odd decision to value just 5 percent of the entire collection and its repeated failure to provide ownership information, there will be litigation surrounding the art and it will be time consuming," Syncora said in its objection.
Syncora was among several creditors that requested a delay on Friday, the deadline Judge Steven Rhodes set for objections to his schedule that called for a trial to start on June 16.
The plan Detroit filed with the U.S. Bankruptcy Court a week ago would result in cuts to city worker pensions and even deeper cuts to holders of certain Detroit bonds that were lumped into the city's nearly $12 billion pile of unsecured debt.