The city where Berry Gordy Jr. shaped Motown’s most powerful musical lineup is now bankrupt.
Last year, Judge Steven Rhodes stated Detroit met the criteria to file for Chapter 9 bankruptcy. It became the first largest municipality city ever to enter bankruptcy. However, on Wednesday it was announced Detroit was granted a chance to settle its financial woes.
Judge Rhodes decided to postpone the trial until next week to give the city time to work out a settlement deal with a major credit debtor. A joint court filing stated Detroit and Syncora Guarantee, a bond insurer, have reached an agreement to settle a $400 million claim. As a result of the settlement, Syncora will receive 26 percent of what it is owed.
Once dubbed the “Motor City,” Detroit would extend Syncora’s lease on a tunnel between the U.S. and Canada by 20 years and grant the company a 30-year lease on Grand Circus Park parking garage, located downtown.
Both sides will need two days to complete the deal.
In a statement made to The Associate Press, Syncora attorney James Sprayregen said, “We are hopeful the deal will be finalized in the next 48 hours.”
Detroit also hopes to resolve a $1 billion claim with Financial Guaranty Insurance, another bond insurer.