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Insurers Seek Enforcement of State Law Protections for City of Detroit GO Bonds



by Cadwalader Wickersham Taft LLP - New York Office

November 13, 2013

Previously published on November 12, 2013

On November 8, 2013, three monoline insurers of the City's general obligation bonds commenced adversary proceedings in the City of Detroit bankruptcy case. Through these actions, the monoline insurers seek to compel enforcement of the status quo for the general obligation bonds by requiring the City to continue to segregate ad valorem taxes in accordance with Michigan law. As these actions progress, they may clarify whether state law protections for general obligation bonds apply in chapter 9 and test the jurisdictional limitations imposed on a bankruptcy court by section 904(2) of the Bankruptcy Code.


 

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