FGIC’s Settlement: A roundup of news coverage

FGIC’s Settlement: A roundup of news coverage

This week’s announcement that Financial Guaranty Insurance Co. had settled its $1.4 billion claim with the city as part of the bankruptcy case was, obviously, big news. Here’s a roundup of what a variety of media outlets broadcast and published about it.

Bloomberg’s Steven Church (based in Delaware) and Chris Christoff (based in Lansing) teamed up for a highly readable piece focused on the finances of the deal. They write:

Requiring creditors to invest more in the city is at least rare, and may be unprecedented in a municipal bankruptcy, attorney James E. Spiotto said in an interview. The deal resembles a corporate restructuring, he said. “To some degree it’s a lot like Chapter 11, where they are giving them a chance to buy equity in the debtor,” Spiotto said. “They have to put something into it to get something out.”

The Detroit News’ business columnist Daniel Howes analyzed the deal as moving the creditors from cash payouts to investments in the future of the city. Indeed there has been courtroom rhetoric about “adversaries becoming partners” with the city over the course of the trial, the adversaries being FGIC and bond insurer Syncora, which settled last month in a similar deal. Howes writes:

The city’s deal with its last major holdout creditor yokes another adversary — and its capital — to revitalization of the city, turning a tough bond insurer into the kind of investor Detroit needs. The agreement, reached early Thursday, gives Financial Guaranty Insurance Co. options to acquire Joe Louis Arena, its adjacent parking deck and allows it to enter into a development agreement culminating in a riverfront hotel, retail and condos. Not a bad turn for the largest city in American history to go bankrupt: a creditor into the city for more than $1 billion, its leaders desperate to recoup their losses, gets a prime, strings-attached tract overlooking an international border.

Meanwhile, speaking of development, the Detroit City Council and Mayor Mike Duggan disagree about a proposed city ordinance that would require community involvement in projects that receive tax breaks or other city subsidies. In a Detroit Free Press piece today, city hall reporter Joe Guillen writes:

The proposed law, backed by City Council President Brenda Jones, aims to make sure Detroiters have access to jobs and other benefits associated with new developments. Community leaders already have collected 2,500 signatures in support of the law, Jones said. But Mayor Mike Duggan’s administration on Thursday joined critics in the business community in opposing the ordinance. “We absolutely believe every developer, every company should deliver a community benefit,” said Duggan’s chief of staff, Alexis Wiley. “But this ordinance is not the right answer.”