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September 10, 2014

Key Creditor Reaches Agreement With Detroit on Debt Deal

Detroit officials have reached a tentative agreement with bond insurer Syncora that could mark a breakthrough in the city's effort to resolve the country's biggest municipal bankruptcy and preserve its art museum's collection of masterpieces, writes the Detroit Free Press. The firm and the city requested a 48-hour suspension of the bankruptcy trial that began September 2 to work out final details of the pact, including the cooperation of banks involved in related debt deals.

Syncora, which is owed hundreds of millions of dollars as a guarantor of Detroit's pension debt, was the most vociferous opponent of the "grand bargain" at the heart of the city's restructuring plan, which relies on some $366-million from private foundations and would see the Detroit Institute of Arts turned over to a nonprofit trust. The bond firm had led calls for the city to sell valuable chunks of the museum's collection to satisfy creditors.