(Bloomberg) — Detroit's proposal to exit its record municipal bankruptcy by paying retirees more than bond investors will cause "serious mayhem," an attorney for the plan's opponents told a judge.
Marc Kieselstein, an attorney for bond insurer Syncora Guarantee Inc., outlined the opponent's case against the city's proposal on the second day of a trial in Detroit federal court. The bond insurer says the plan would illegally pay retired city workers much more on their claims than investors who hold more than $1.4 billion in pension-related debt.
The city's debt-cutting plan can't be approved "without doing serious mayhem to the rule of law, popular demand notwithstanding," Kieselstein told U.S. Bankruptcy Judge Steven Rhodes.
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