Detroit announced a settlement yesterday with its final major holdout creditor, Financial Guaranty Insurance Co., as it edged closer to exiting the biggest-ever municipal bankruptcy, Reuters reported yesterday. The settlement includes an option for FGIC to develop the Joe Louis Arena and parking garage for a mixed-use project, primarily a hotel serving the nearby Cobo Convention Center, according to Corinne Ball, an attorney at law firm Jones Day, which represents Detroit in the case. The bond insurer will also receive about $152 million in city notes, part of which will be backed by public parking revenue, as well as $19.7 million in credits it can apply for purchasing city parking assets or real estate. In return, FGIC, which has a $1.1 billion exposure from insuring the pension certificates of participation (COPs), will drop its objections to the city's plan to adjust $18 billion of debt, Ball told Bankruptcy Judge Steven Rhodes.
