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Ambac Assurance Corp. has turned to Harrison J. Goldin, New York City’s comptroller during its mid-1970s fiscal crisis, for advice on Detroit and its plan to partially repay some debt backed by municipal taxpayers there, Bloomberg News reported today. Detroit emergency manager Kevyn Orr halted payments on $2 billion in unsecured debt, including some tax-backed general-obligation bonds, in June. Ambac, a unit of New York-based Ambac Financial Group Inc. (AMBC) that insures $170.3 million in the securities, said that the move imperils the city’s recovery. Orr, appointed this year by Republican Governor Rick Snyder to oversee the fiscal recovery of Michigan’s largest city, has proposed skipping some debt payments, including those owed on $530 million in unsecured unlimited-tax and limited-tax general-obligation bonds. Orr is grappling with $17 billion in Detroit liabilities as he tries to avoid entering what would be a record municipal bankruptcy.

Detroit sued swaps insurer Syncora Guarantee Inc., blaming it for the withholding of as much as $11 million a month in casino-derived revenue, city Emergency Manager Kevyn Orr said, Bloomberg News reported on Friday. “Syncora is exerting power it does not have to get money to which it has no legal claim, and its actions are putting the city’s entire restructuring efforts in peril,” Orr said on Friday in a statement announcing the Wayne County Circuit Court filing. Detroit is seeking a court order barring Syncora and other defendants from taking any steps to limit the city’s access to revenues from its three casinos.

San Bernardino asked a bankruptcy judge to set aside the objections of two public employees’ pension funds and rule that the California city is eligible for chapter 9 protection, Bloomberg News reported on Saturday. “The city requests that the court deny all the objections in their entirety and enter an order for relief so that the city can continue discussions and negotiations with its creditors, devote more of its limited resources to those negotiations, and prepare and propose a plan of adjustment,” lawyers for San Bernardino said in a court filing. The city sought bankruptcy in August 2012, claiming a cash crisis prevented it from negotiating with creditors first, which is a requirement under California law. The California Public Employees’ Retirement System and the San Bernardino Public Employees’ Association have challenged the legality of the filing.

Standard & Poor's Ratings Services on Wednesday pushed the investment grade ratings on $5.42 billion of Detroit water and sewage revenue bonds down into the junk category, citing uncertainty over a potential restructuring of the debt by the emergency manager running the city, Reuters reported. Kevyn Orr, the corporate bankruptcy attorney picked by the state of Michigan in March to manage its biggest city, last month proposed spinning off Detroit's water and sewer services into an independent authority that could redeem or restructure outstanding revenue debt. S&P said that under a restructuring the repayment terms could change, including principal and interest amounts and the amortization schedule.

A group of California taxpayers went to court on Friday to demand a greater role in determining how the city of Stockton would raise taxes to exit the bankruptcy it filed a year ago, Reuters reported. The group asked the bankruptcy court for official committee status so its members could see details on Stockton's plan for increasing its sales tax. If granted this status, the group could also participate in talks about the city's plan to adjust its debts.

Jefferson County, Ala., filed a plan to end the biggest U.S. municipal bankruptcy later this year by imposing more than $1 billion in principal reduction on investors who hold defaulted sewer-related debt, Bloomberg News reported yesterday. Only a small percentage of the county’s $4.2 billion in debt will be paid in full, marking the first time U.S. investors holding municipal debt have been forced to take losses on the principal owed to them as part of a bankruptcy case. The plan is based on a settlement announced earlier this month among JPMorgan Chase & Co., seven hedge funds and a group of bond insurers, which together hold about $2.4 billion of the debt. The group will split about $1.84 billion, with JPMorgan taking the steepest cuts, collecting $375 million of the $1.22 billion it is owed, according to the plan.

Moody’s Investors Service, dissatisfied with the way states measure what they owe their retirees, released its own numbers yesterday showing that the 50 states have, in aggregate, just 48 cents for every dollar of pensions they have promised, the New York Times DealBook blog reported yesterday. That is much less than the 74 cents on the dollar that the states now report, suggesting the states are short by some $980 billion, with many local governments, like school districts, on the hook for additional billions that they have not disclosed at all. The disparity suggests that politically difficult steps taken recently by many states to fix their pension problems—raising retirement ages, requiring bigger contributions from workers, lowering benefits for new hires—will prove insufficient because they were based on underestimates of the problem.

Alabama's Jefferson County yesterday approved another negotiated settlement covering $138 million of creditors' claims as the local government put finishing touches on a plan to wind up America's biggest municipal bankruptcy, Reuters reported yesterday. County officials said the plan of adjustment, which includes years of rate hikes for sewer customers and a late 2013 sale by the county of $1.9 billion of refinancing debt, would be filed in bankruptcy court on Sunday. The county commissioners yesterday voted 4 to 1 to approve the deal with Bank of Nova Scotia, State Street Bank & Trust and Bank of New York Mellon, which had been the county's liquidity banks and provided short-term loans. The agreement will return 80 cents on the dollar to the banks, plus $2.7 million to satisfy claims of more than $20 million for interest costs tied to defaulted sewer debt, the commissioners were told during a commission meeting.

The small California city of Atwater has stepped away from the brink of bankruptcy with the approval of a budget that benefits from new revenue and does not rely on layoffs for the first time in five years, Reuters reported yesterday. Since it declared a fiscal emergency last October, the city of 28,000 was seen at risk of following Stockton, another city in California's Central Valley, into bankruptcy court. To keep its budget balanced, Atwater had cut 40 percent of its workforce over the past five years. Atwater's new $12 million general fund budget approved late on Monday relies on revenue from a sales-tax hike and increased water, waste and garbage service rates, and will fund about 80 positions.

Almost a year since Stockton, Calif., became the biggest U.S. city to file for bankruptcy, its leaders will review a tax plan aimed at restoring it to solvency and reducing crime in one of the 10 most dangerous U.S. cities, Reuters reported on Friday. Stockton's City Council will take up the plan on Tuesday along with a budget proposal that comes after an April ruling by Bankruptcy Judge Christopher Klein that approved letting the city draft a plan for adjusting its debts. The tax plan would raise Stockton's sales tax to 9 percent from 8.25 percent. Proceeds would go to hiring 120 more police officers, and for other safety programs, and to help Stockton exit from bankruptcy, a goal the city could trumpet in the debt-adjustment plan it will file with Judge Klein in September.