Paging Bankruptcy Guy - Swaps Settlement Hearing

[corktownyuppie]

The Freep Liveblog was very interesting.
http://live.freep.com/Event/Live_blo...hearing?Page=0

I feel like I have a good handle on all the players, but this was pretty complex, and I was starting to get lost on all the players and where they stand.

Am I getting this right?

[[1) City - Primary concern is shedding debt and taking the savings to inject into services. They've defaulted on the bonds, and but casino revenue is locked up because they were pledged as collateral for the bonds. They know the debt could be voided and nullified completely -- as its legality is in question -- but the cost of litigating it would be millions of dollars per month, which would hold up much needed service improvements. Moreover, after all the time and effort, they could still lose in court and end up having wasted the time, money, and still end up losing all the casino revenue.

[[2) Banks/Lenders - Primary concern is getting paid, but they're pretty sheltered here, as first the bonds were collateralized by casino revenue [[which is locked up) and then insured again by Syncora.

[[3) Syncora - Insurer, they will pay out to the lenders should the City continue defaulting and if the casino revenue is somehow detached as collateral. They claim that the lenders cannot unilaterally approve a settlement without the insurer signing off, as its the insurance company that will be the entity to eventually foot the bill.

Another perspective from the insurance company, if the settlement is approved, the insurance company be released of its insurance liability to the lender by making the same argument that the city might make...that the deals were never legal to begin with. And if the judge approves the settlement, that doing so would automatically remove the insurance company's rights to try the case in court.

[[4) Retiree Committee - They believe that every dollar going to pay bondholders [[either by contracted bond payments or in any settlement agreement) is more money that could've been used toward making pensioners whole. They're stance is that the settlement is a bad deal, because the whole thing should have been voided as an illegal deal, meaning that there's a case that $200+ million already paid could be captured back in a lawsuit. So it's not just $85MM...it's $85MM saved plus another $200MM coming back in court.

Am I getting that right? What am I missing?