The agreement, announced in a court filing Sept. 9, would remove a big obstacle from Detroit's path to resolving its record municipal bankruptcy and cutting more than $7 billion in debt. The deal with Syncora also leaves fellow bond insurer Financial Guaranty Insurance Co. as the only major creditor opposed to Detroit's program.
Still, hurdles remain for the Syncora settlement to go through.
Earlier this year, Bank of America's Merrill Lynch unit and UBS AG agreed to take less than they were owed by Detroit on soured interest-rate swaps, potentially triggering their right to collect insurance from Syncora. The New York-based insurer thinks its settlement with Detroit can't go forward unless the banks give up their right to insurance, a person familiar with the negotiations said.
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