Detroit reaches deal with key creditor that may clear major stumbling block in bankruptcy case

Associated Press

Detroit has reached a tentative deal with one of its key creditors that could remove the biggest stumbling block in the city's plan to reduce its debts and emerge from federal bankruptcy protection.

A court filing Tuesday evening says that Detroit and the bond insurer Syncora Guarantee "have reached an agreement in principle" to settle the company's $400 million claim in the nation's largest-ever municipal bankruptcy case.

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The two sides ask Judge Steven Rhodes for a postponement of the bankruptcy case trial until Friday.

Syncora Guarantee and fellow bond insurer Financial Guaranty Insurance Co. have been leading a small group of creditors fighting the plan by state-appointed emergency manager Kevyn Orr.

Most creditors have endorsed Detroit's plan to cut $12 billion in unsecured debt to about $5 billion.