CHICAGO - Detroit is days away from nailing down the final settlement in its bankruptcy case.
Attorneys for the city and bond insurer Financial Guaranty Insurance Co., the last major creditor yet to settle with the city, said Tuesday morning in federal court that they would likely be ready to unveil details of a deal on Thursday.
A settlement with FGIC would mean the city would have support from all major creditors for its plan of confirmation. It would ease the city's exit from Chapter 9 by eliminating the potential for subsequent appeals from major creditors, and speed up the current confirmation plan trial. U.S. Bankruptcy Judge Steven Rhodes, who is overseeing the case, would still need to rule that the plan is fair and feasible.
FGIC's attorneys Tuesday asked Rhodes to allow them to delay calling witnesses as part of the trial until Thursday. FGIC attorney Alfredo Perez told Rhodes that the parties had made a lot of progress during recent negotiations and that he was proceeding "as if we will have a deal to announce to the court Thursday," according to local reports from the courtroom.
Rhodes granted the request.
Jones Day attorney Thomas Cullen told Rhodes that the city also has "a firm and active faith" that it would be able to hammer out a final settlement within the next few days.
A FGIC deal is expected to mirror one with bond insurer Syncora Guarantee Inc., by featuring a mix of cash and Detroit real estate and leases on parking garages. The city would likely issue bonds to cover the cash payment. FGIC insures $1.1 billion of pension certificates of participation that the city is suing to repudiate as illegally issued. A settlement would mean Detroit would drop the lawsuit.
The confirmation plan trial resumed Tuesday after a week break. The city rested its case on Oct. 6.