DETROIT (WXYZ) - 7 Action News reporter Kim Russell is blogging live from Federal Court for a hearing on Detroit's bankruptcy.
Follow along live :
3:40 p.m. Syncora’s attorney is now talking. He says the question is whether the casino revenue is property of the state. Syncora’s stance is that they are not. He says the state has an interest in the money, and is entitled to it if it fills obligations. He says there for US Bank has the right to withhold the money if the city doesn’t fulfill its contractual obligations.
3:11 p.m. The city's attorneys are now talking about how important the revenue from the casinos is to Detroit when it comes to the city's abilities to operate. The argument is that Syncora has not lost anything in its agreement, and should not withhold the money due the city from the casinos, in order to help make sure money owed to city pensions is paid. The city says it is not in default.
3:00 p.m. Court is back in session. Attorneys are discussing whether information protected by the non-disclosure agreements should be released. The judge then said he would wait for a motion to be filed by the city of Detroit on the issue.
11:20 a.m. The judge says they will need to further discuss why the city has non-disclosure agreements regarding its finances. Court is now in recess until 3:00p.m.
11:15 a.m. We now are left with questions as to what the city is hiding. When talking about evidence and discovery, Syncora's attorneys said the city has a non-disclosure agreement regarding its financial information with Syncora. Syncora says considering the circumstances, that the city is in bankruptcy court, that information should be discoverable.
The city then argued that the information needs to be kept secret so the city remains competitive. The judge is questioning how keeping financial information and projections secret would protect the city. He asked why citizens and those owed money by Detroit would not be allowed to see such information.
The city's attorneys said the information isn't relevant to the bankrupcty.
"This is bankruptcy, what's not relevant?" asked the judge.
10:45 a.m. The judge is asking Syncora's attorneys and the city's attorneys to take time, and reconvene this afternoon to discuss how the stay impacts Syncora's activities.
10:43 a.m. The city is asking the court to take steps to stop Syncora from getting control of the city’s property.
10:25 a.m. Another issue is now being addressed before the court. It involves an insurance company called Syncora Capital Assurance, Syncora Guarantee, Inc. It guaranteed some of the money the city borrowed from the corporations that oversee retirement funds for city employees. The payments are made with some, about $4.5 million a month, of the casino revenue collected by the city. The city gets about $15 million a month from casinos.
For background, when Kevyn Orr was appointed, Syncora claims the city created a default on its unsecured pension obligations. The U.S. Bank then allowed Syncora to trap the money from the casino and withhold it from the city to protect the secured obligations. Wayne County Circuit Court put a stop to that after the city argued it needed that money to operate. It issued a restraining order to stop Syncora from holding the money. Syncora wants the restraining order removed.
10:20 a.m. The judge is going to enter an order that allows Davis to seek a judgment that the open law meetings act was violated and request attorneys fees. However, Davis will not be allowed to use this lawsuit to invalidate decisions already made by Orr.
10:10 a.m. A lawyer from the state attorney generals office argued this could have a larger impact, and should not be allowed to move forward.
10:05 a.m. The judge is hearing from Robert Davis's attorneys first. They are asking for clarification as to whether the suit can move forward or not as expected. The judge wants to know what the goal is if it is found that Kevyn Orr was appointed improperly. An attorney said they want a declaration that the open meetings act was violated and attorneys fees paid.
10:00 a.m. The hearing is just beginning in Federal Court in Detroit. There are several matters that will be before the court today.
One involves a lawsuit filed by self-proclaimed activist Robert Davis. He wants the court to allow a lawsuit he filed in Ingham County against Governor Rick Snyder, State Treasurer Andy Dillon, and the State Loan Board to go forward. The lawsuit claims that the open meetings act was violated in meetings that resulted in the appointment of Kevyn Orr as Detroit’s emergency manager. If the lawsuit does move forward it could have a domino effect on the bankruptcy hearing. The reason, if a judge would void the appointment of Kevyn Orr, that could impact the legitimacy of decisions made by Kevyn Orr.
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