Syncora Reaches Deal In Detroit Bankruptcy

Bond insurer Syncora – one of Detroit’s holdout creditors since the city filed for protection under Chapter 9 of the bankruptcy law – has agreed to a comprehensive settlement and has issued a formal apology for its intemperate language during the case, according to the Detroit Free Press. While Syncora’s former ally, bond insurer Financial Guaranty Insurance Co., is still opposing Detroit’s restructuring deal, this development brings the city within reach of an exit from its historic bankruptcy.

Syncora and Detroit agreed to a tentative settlement Sept. 7 in which the creditor would receive a 30-year lease on a parking garage, a 20-year extension on its right to operate the Detroit-Windsor Tunnel and millions of dollars in bonds and options to purchase city property, according to the news source. Estimates suggest that this deal amounts to 20 percent to 25 percent of the $200 million that Detroit owes the bond insurer.

This marks a significant turnaround from just a few weeks ago, when Judge Steven Rhodes considered sanctions against Syncora lawyers for making allegations that questioned the impartiality of mediators in the case, according to The Wall Street Journal. Rhodes suggested that Syncora make a public apology, but did not require it. Syncora’s attorney’s elected to do so anyway, issuing a formal apology to mediators Gerald Rosen and Eugene Driker.

“We observed first-hand his [Rosen’s] remarkable skill as a mediator; his tenacity and perseverance under incredibly trying circumstances; and his great personal sacrifices, which included many long hours and making himself available at any time and on short notice,” Syncora said, according to The Detroit Free Press. “This was a Herculean effort, and without Judge Rosen’s steady hand and calm [sic] under pressure, the settlement would not have been achieved.”

Financial Guaranty Insurance Co., which holds an estimated $1 billion in claims against the city, has not reached a settlement with Detroit, but has been ordered to participate in new mediation, according to the Journal.

This story is a follow up to my post last week regarding Syncora’s involvement with Detroit’s Bankruptcy Syncora Could Face Sanctions in Detroit Bankruptcy. As a bankruptcy attorney, I have been following Detroit’s bouts with bankruptcy for some time now, feel free to check out some of my previous posts on the subject:

• Panel of Federal Judges Halts Appeals In Detroit Bankruptcy Case
• Two Important Votes in Detroit
• Objections raised over Detroit bankruptcy plan
• Detroit bankruptcy costs reached almost $36 million in 2013
• Silent Victims In The Detroit Bankruptcy Filing
• Judge Rhodes Taps Experts To Help in Detroit Bankruptcy