DETROIT (AP) — A major Detroit creditor on Tuesday objected to the bankrupt city's plan to wipe out or reduce billions of dollars in debt, saying it should be scrapped before a trial scheduled to start next week.
New York-based Syncora Guarantee said in a court filing that the plan put together by state-appointed emergency manager Kevyn Orr and attorneys hired by the city is unfair, will be too costly to defend, and will ultimately fail.
That would "squander a once-in-a-lifetime opportunity to revitalize one of America's most treasured cities," the filing says.
The largest municipal bankruptcy in U.S. history is set for trial on Aug. 21.
A city spokesman did not respond Tuesday to an email from The Associated Press seeking comment.
Detroit filed for bankruptcy protection a year ago, saying it had no way to pay off at least $18 billion debt. Syncora's claim is about $400 million, and it's tied to an interest-rate swap deal on pension bond debt.
In 2009, Detroit pledged money from casino revenue taxes as collateral to avoid defaulting on past pension debt payments. The swaps allowed Detroit to get fixed interest rates on pension bonds with two banks.
The swaps are backed by Syncora, which acts as a trustee and makes payments from casino revenue to parties involved in the swaps. Syncora unsuccessfully tried to keep up to $15 million of casino tax revenue each month in a bank-held trust. Orr has said the money is crucial in paying for city services.
A primary point in Syncora's objection is a court-mediated agreement between the state, major corporations and foundations that promises more than $800 million over 20 years to support city retiree pensions. The so-called Grand Bargain would stave off the sale of city-owned pieces in the Detroit Institute of Arts to help pay off the city's debt.
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