The deal struck last week is a sign of progress in negotiations to exit bankruptcy and would shift 26 percent of $388 million in claimed liabilities to pensions and to overdue payments on debt.

Memphis has underfunded its city- run pension plan since 2009, putting the cash toward its budget. Tennessee lawmakers want to attach a cost to that kind of scrimping on retirement expenses.

A deal that may help the city speed the end of the biggest-ever U.S. municipal bankruptcy, which is threatening city pensions.

The proposals were quickly dismissed by Detroits emergency manager, Kevyn Orr, who said any sale would not only kill a proposal to pump $816 million into the citys underfunded pension systems, it would also hurt residents.