Syncora Holdings, one of the holdout creditors in the Detroit bankruptcy filing, could face sanctions for its conduct in the case.
Judge Steven Rhodes must decide this week whether he will sanction the company or allow its objection to the so-called “grand bargain,” which is crucial to the city’s restructuring plan, according to WXYZ. Syncora is a bond insurer, and stands to lose hundreds of millions in the bankruptcy.
Syncora lawyers stated that the mediators in the Detroit bankruptcy gave “naked favoritism” to the city’s pensioners and the Detroit Institute of Arts over them and other financial creditors, according to the news source. The grand bargain spins off the DIA into its own separate entity. In exchange, interested parties will give $816 million to soften pension cuts for fire, police and civil retirees in the city.
In their filing, Syncora attorneys said that the grand bargain was, “the product of agenda-driven, conflicted mediators who colluded with certain interested parties to benefit select favored creditors to the gross detriment of disfavored creditors and, remarkably, the city itself,” according to The Detroit Free Press.
Experts watching the case expressed surprise that Syncora made public allegations that mediators are violating judicial codes of conduct and conspiring to achieve politically motivated goals, the news source explained. These are serious charges, and as a result, the creditors lawyers could face fines or other sanctions should Rhodes determine that the team is attempting to “sandbag” the deal.
Syncora’s interest in the Chapter 9 bankruptcy stems from a deal that it and fellow bond insurer Financial Guaranty Insurance Co. made with the city in 2005, The Free Press explained. The companies guaranteed payments on a $1.4 billion debt deal under Mayor Kwame Kilpatrick, in which the city attempted to eliminate its unfunded pension liabilities. Detroit now argues that the deal was illegal and should be discarded.
As a creditors’ rights and bankruptcy attorney, I have written about Detroit’s bankruptcy. If you want to get the full story of the current state of Motor City. Check out some of my previous posts:
Panel of Federal Judges Halts Appeals In Detroit Bankruptcy Case
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
Dissolving Your Business: Essential Legal Steps to Protect Your Interests
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
The Role of Corporate Restructuring in Mergers & Acquisitions
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
