Law and legal issues

Detroit, going to battle with its interest-rate swap counterparties, filed a lawsuit seeking to invalidate $1.4 billion of pension certificates that the swaps hedge, saying the borrowing was illegal from the start.

Detroit's bankruptcy plan circulated to creditors last week yields them greater recoveries to creditors than a first offer floated last year, but should still be seen as a rough draft that could change significantly.

Detroit has asked the bankruptcy court overseeing its Chapter 9 case to dissolve a committee representing unsecured creditors that the U.S. Trustee said is required under code.

Detroit late Friday filed a lawsuit challenging the legality of the structure tied to its 2005 sale of pension certificates and controversial swaps linked to the debt.

Negotiations intensified on several fronts as Detroit nears a self-imposed deadline to craft a detailed plan to exit Chapter 9 bankruptcy, with the fate of a debtor-in-possession loan in doubt.

Harrisburg, Pa., officials seek $2 million in the municipal budget to issue tax and revenue anticipation notes, which would mark a return to the debt markets.

Detroit has reportedly proposed paying its pensioners more — and in cash — than its general obligation bondholders, who would receive notes equivalent to roughly 20% percent of their claims in its bankruptcy exit plan.

The Tuomey Healthcare System is fighting what it calls improper federal efforts to subordinate bondholders while it appeals a massive fraud judgement.

Michigan Gov. Rick Snyder declared fiscal emergencies in a pair of Detroit suburbs, Royal Oak Township and Highland Park, the first step toward a state takeover or declaration of bankruptcy.

San Jose Mayor Chuck Reed and other proponents of the Pension Reform Act of 2014 say they will legally challenge Attorney General Kamala Harris's ballot summary language, likely delaying the measure.

A broad coalition of Illinois unions accuses the state of pension "theft" in its long anticipated lawsuit that seeks to overturn the state's pension system overhaul before it takes effect in June.

Troubled North Las Vegas received two downgrades to its already junk-rated debt after a judge ruled against a state of emergency the city employed last year to avoid honoring union contracts.

Detroit's emergency manager said Wednesday he has presented the city's creditors with a proposed plan of adjustment, a key benchmark in the historic Chapter 9 case.

The Detroit Institute of Arts said it will try to raise $100 million as part of a high-profile public-private effort to raise money to pledge to the city's pensions while safeguarding its prized art collection.

The lawyer representing Rhode Island in its suit against 38 Studios told state lawmakers that legislation would enhance the prospects of a settlement.

The city of Stockton, Calif. now has a new city manager, Kurt Wilson, to help guide it through the remainder of its bankruptcy process.

Sentencing for convicted bid-rigger David Rubin has been pushed back until March 6 because his attorney will not be able to be present during the previously scheduled Feb. 3 date.

Moody's Investors Service has downgraded the issuer rating on Fresno, Calif. to Baa1, and about $300 million of related debt a notch further into junk territory.

A plan to fund Detroit's pensions while protecting its art collection received a boost Tuesday when a major foundation pledged $40 million to the effort.

Michigan Attorney General Bill Schuette Monday asked a federal appeals court to expedite a decision on whether Detroit can cut its pensions, calling it a question of national importance.