U.S. Bankruptcy Judge Steven Rhodes ordered a week-long break in Detroit's bankruptcy trial on Wednesday, giving the last major objector to the city's restructuring plan time to rework its case.
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The hearing will be adjourned from Friday and reconvene on Monday, Sept. 29. It also was put on hiatus last week for three days while the city put the finishing touches on a settlement with another holdout creditor, Syncora Guarantee Inc .
Syncora formally withdrew its objections to the plan in light of the settlement on Tuesday, leaving Financial Guaranty Insurance Co (FGIC), which has $1.1 billion on the line, to lead the fight against the plan and the questioning of witnesses. The insurer said it needed time to organize its case.
The hearing to determine if the plan is fair and feasible began on Sept. 2 and was expected to stretch through the middle of October.
FGIC and other, mostly smaller, objecting creditors must within the week-long break file any objections to the latest version of the plan, complete and post expert reports, and conduct any needed discovery and depositions.
The latest version of the plan, released on Tuesday, offers FGIC some of the same terms of the Syncora settlement, which would garner it a 13.9 percent recovery.
FGIC, though, is pushing to monetize or sell the collection of the Detroit Institute of Arts to reap a richer recovery. But if Rhodes approves the plan as it currently stands he could impose its terms on FGIC in what is known as a "cramdown."
(Reporting by Lisa Lambert Editing by W Simon and J Benkoe)