Detroit might sue swap counterparties: city attorney

A lawyer for Detroit said in U.S. Bankruptcy Court on Wednesday that the city might still pursue litigation over its interest-rate swap agreements, even though the city has maintained that the swap counterparties are secured creditors. Attorney Thomas Cullen of law firm Jones Day made the statement to defend the city’s decision to claim attorney-client privilege over internal memos discussing the legality of the swaps. The city used the swaps contracts to hedge interest rate risk on some of the $1.4 billion of pension debt that Detroit sold in 2005 and 2006. U.S. Bankruptcy Judge Steven Rhodes, who is overseeing Detroit’s historic bankruptcy case, pushed the city attorneys for information about the swaps deal.


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