Feb. 20 (Bloomberg) — Detroit's record $18 billion bankruptcy should end an erroneous presumption of municipal bond investors that they have more protection from losses than other creditors, a lawyer for the city told a judge.
Bruce Bennett, a lead attorney for Detroit, urged U.S. Bankruptcy Judge Steven Rhodes yesterday to rule that the city's general obligation bondholders don't have a higher repayment priority than other creditors in the case.
"It's not a good thing that we have to change so many things that are pre-existing assumptions," Bennett said, referring to the municipal bond market. Detroit's bankruptcy "is going to change many, many things very substantially."
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