Detroit gives Joe Louis Arena to creditor

Land deal means Joe Louis Arena will be demolished after Red Wings move out

DETROIT – The city of Detroit, with financial help from the state, plans to demolish Joe Louis Arena, the home of the Detroit Red Wings, and give the land to a creditor for development as part of a major settlement in the city's bankruptcy case.

Lawyers disclosed the deal Thursday in court where Judge Steven Rhodes has been holding a trial to determine if Detroit's plan to get out of bankruptcy is fair and feasible for the long run.

A bond insurer with a $1 billion claim, Financial Guaranty Insurance Company (FGIC), was one of the last critics still standing after months of settlements between Detroit and other creditors. But the land deal now puts FGIC on the sidelines and moves the trial closer to completion.

"We are pleased to be able to announce this settlement with the city, which provides FGIC a recovery consistent with other Class 9 creditors," said CEO Timothy Travers in a statement. "FGIC has always been, and continues to be, believers in Detroit's long-term revival prospects, and this deal gives us the opportunity to participate in and help catalyze that revival."

The Red Wings play in city-owned Joe Louis Arena along the Detroit River, but are planning to move to a new home a few miles away. The arena and a parking garage would be demolished, giving Financial Guaranty nearly nine acres for a hotel, condominiums, office space or retail development.

The state of Michigan has agreed to provide $6 million for demolition, which likely would start in 2017. The land is considered to be a valuable parcel because it's near Cobo Center, Detroit's downtown convention hall.

The Macomb Interceptor Project also announced Thursday that it had settled with the city for $22 million. The Interceptor Project was Bobby Ferguson's Detroit Water and Sewerage Department

involvement with a water main break.

Another bond insurer, Syncora, has already settled and is getting cash and long-term leases on a parking garage and the tunnel between Detroit and Canada.

The judge now must decide whether Detroit's bankruptcy plan is fair and feasible for the years ahead.

The projected timeline:

October 2014 – development signing agreement

August 2017 – Red Wings leave Joe Louis Arena for their new arena

October 2017 – Development proposal gets under way

Completed development in 2022

Video: Players, fans already missing 'The Joe'

Read: Where things stand at start of the trial for Detroit's plan to exit bankruptcy

Recap: Detroit's bankruptcy trial