Major Insurer's Opposition to Emergency Manager's Plan Puts Detroit Closer to Bankruptcy

An insurance company that backs more than $170 million in Detroit bonds said it opposes emergency manager Kevyn Orr’s attempt to restructure the city’s finances, a rejection appearing to place the city one step closer to the largest municipal bankruptcy in U.S history.

Ambac Assurance said in a written statement Monday night that it does not agree with Orr’s plan to treat general obligation bondholders the same as unsecured creditors.

The company didn’t say what it plans to do next. But it did announce the hiring of Harrison J. Goldin of Goldin Associates. Goldin is a former New York City comptroller who played a key role in New York’s financial restructuring in 1970s.

The insurer said Orr’s proposal “is harmful to Detroit and the interests of taxpayers in Michigan” because it would threaten the city’s ability to obtain affordable bond financing in the future.