What percentage of the debt is held by private individuals and what percentage is bets by traders?
You want to read about law 936 and also understand that the bonds were sold to retirement funds and individuals. 22% of the debt is by local agencies. If you listen to the podcast (or read the transcript) it will make more sense.
In the Detroit one, bond holders were able to get back .75c on the dollar[0], and I suspect the haircut here will be worse for bond holders.
[0] http://www.barrons.com/articles/seven-lessons-from-detroits-...