Detroit creditor Syncora backtracks on conduct, confirms settlement

By Kali Hays

New York, Sept. 15 – The City of Detroit creditor Syncora Guarantee Inc. confirmed it reached a comprehensive settlement with the city related to its $366 million claim and apologized to court-appointed mediators, Gerald Rosen and Eugene Driker, in a Monday declaration with the U.S. Bankruptcy Court for the Eastern District of Michigan.

As previously reported, in an objection to Detroit’s proposed plan of adjustment, Syncora alleged the plan was not proposed in good faith, that Rosen and Driker were biased in favor of the creditors with pension claims and against the financial creditors, and that as a result of that bias, the favored creditors will be paid in full while the financial creditors will be paid almost nothing.

Syncora went on to claim that the mediators had failed to disclose that Driker’s wife had been on the board of the Detroit Institute of Arts Corp. and that this undisclosed conflict defeated the city’s good faith in proposing its plan.

During an Aug. 29 hearing, judge Steven Rhodes said the allegations were “scandalous and defamatory.”

In the declaration, Syncora said it is “deeply sorry for the mistake and for any unfounded aspersions cast on Rosen and the Drikers.”

“This [settlement] was a herculean effort, and without Judge Rosen’s steady hand and calm under pressure, the settlement would not have been achieved. The role of chief mediator is, in many ways, a thankless task. But this role is absolutely critical to the success of proceedings such as this, where the stakes and emotions are high and the issues enormously complex and contentious,” the declaration stated.

Syncora said that certain terms and conditions of the settlement are still being negotiated with Detroit, but the settlement is currently in “a manner reasonably acceptable” to both parties.

Detroit’s confirmation hearing is set to continue on Sept. 16.

Detroit filed for bankruptcy on July 18, 2013 under Chapter 9 case number 13-53846.

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