Statement on Complaint Against the City of Detroit
November 8, 2013
Assured Guaranty today filed a complaint in the US Bankruptcy Court, Eastern District of Michigan, Southern Division, against the City of Detroit and its representatives seeking a declaratory judgment with respect to the City’s unlawful treatment of its Unlimited Tax General Obligation Bonds (the “Unlimited Tax Bonds”). The complaint seeks a court order establishing that, under Michigan law, the proceeds of ad valorem taxes levied and collected by the City for the sole purpose of repaying the Unlimited Tax Bonds are “restricted funds” and the City is prohibited from using the restricted funds for any purposes other than repaying holders of the Unlimited Tax Bonds.
Our efforts to date to resolve this dispute consensually have been rebuffed, and City Officials have refused to comply with state law that requires ad valorem tax revenues, specifically approved by the voters of Detroit for repayment of the Unlimited Tax Bonds, to be used only for that purpose.
Assured Guaranty is prepared to work with the Emergency Manager, Governor and other stakeholders to achieve a fair and equitable resolution for all parties that respects the laws of the State of Michigan. As always, investors that hold bonds insured by Assured Guaranty can be certain they will continue to receive uninterrupted full and timely payment of scheduled debt service when due in accordance with the terms of Assured Guaranty’s insurance policies.