From the article:
Opponents of the city’s debt-reduction proposal include bond insurer Syncora Guarantee Inc., which would be obliged to cover some investor losses imposed by the plan. Syncora said the mediators who helped arrange the grand bargain were biased against bondholders.
During the trial, the bond insurer may argue that any money coming into the city should be shared among all creditors, not restricted to the pension systems, as the foundations required. Critics claim the plan violates the general rule in bankruptcy that creditors with the same repayment priority get similar treatment.
Current and former city employees, as well as investors, would be forced to take less than the $10.4 billion they are owed if Rhodes approves the plan, while some bondholders would recover as little as 11 percent of their claims.
Not being well versed in BK Law, it would seem, on its face, that pensioners and bond-holders are not in like classes ... investors are investors, i.e., assuming of risk; whereas, pensioners did/have not anticipated such risk.
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