A legal faceoff in Detroit’s municipal bankruptcy litigation must be heard prior to a trial on the city’s debt-slashing proposal, a Federal Court of Appeals ruled.
The 6th U.S. Circuit Court of Appeals, in a ruling made last Wednesday, implied a lower district judge failed to maintain an appeal by Syncora, a municipal bond insurer, questioning the city’s utilization of casino tax profits during the litigation.
The Court of Appeals ordered a federal judge to make a ruling next week on a request by Syncora Guarantee Inc. and Syncora Capital Assurance Inc., to bar the city from making use of casino tax revenue instead of preserving the funds to make payments to creditors which include Syncora.
A trial before a bankruptcy judge on Detroit’s debt-cutting proposal to conclude an $18 billion long-term obligation is set to start next month. It wasn’t completely clear whether the Court of Appeals ruling would push the start of the trial in the country’s biggest municipal bankruptcy litigation.
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