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
Breaking Down New Jersey’s “Mansion” Tax: What Buyers and Sellers Need to Know
For many years, the New Jersey Mansion Tax has been a significant consideration in high-value real estate transactions. Recent legislative changes, however, have substantially altered how the tax operates, including who is responsible for paying it and the amount owed in certain transactions. Whether you are purchasing, selling, or investing in New Jersey real estate, […]
Estate Planning for Digital Assets Under New Jersey Law
As our personal and financial lives increasingly move online, estate planning must evolve to address a new category of property: digital assets. From email accounts and social media profiles to cryptocurrency and cloud-stored business records, these assets often carry both financial and sentimental value. Yet, without proper planning, they can become inaccessible—or even lost—upon incapacity […]
The Role of Representation and Warranty Insurance in M&A Transactions
In today’s mergers and acquisitions market, representation and warranty (R&W) insurance has become a common feature of deal negotiations. Once used primarily in larger transactions, R&W insurance is now frequently incorporated into middle-market deals as buyers and sellers look for efficient ways to allocate risk and close deals. When structured properly, R&W insurance can help […]
You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?
Receiving a federal grand jury subpoena is not something most businesses or individuals anticipate. While it can be concerning, a federal grand jury subpoena does not necessarily mean that you are being accused of wrongdoing. It does, however, mean that a federal criminal investigation is underway and that federal prosecutors believe you may possess information […]
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
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!
