Syncora may face sanctions in Detroit bankruptcy case

(WXYZ) - Detroit Bankruptcy Judge Steven Rhodes blasted Syncora Guarantee for making an “unprofessional attack” on federal mediators and gave Syncora until September 12 to show why they should not face sanctions. 

Attorneys for Syncora had said mediators had used “naked favoritism” by brokering the Grand Bargain that saves the art collection at the Detroit Institute of Arts from being sold and softens pension cuts for 23,000 Detroit retirees with some $816 million in donations from foundations and the state.  

The mediators are Chief Federal District Judge Gerald Rosen and attorney Eugene Driker. 

Driker’s wife had in the past served on the DIA Board of Directors. The judge has stricken the Syncora allegations of bias from the record. 

City attorneys also wanted the Judge to order Syncora to apologize, but the Judge wrote, “It is warranted here. It is, and to Mrs. Driker, too. Rather, the court concludes that a coerced and therefore insincere apology is not a true apology at all; it is not an acknowledgment of a mistake or an expression of regret.” 

Syncora stands to lose hundreds of millions of dollars in Detroit’s bankruptcy and won’t see any money from the Grand Bargain. 

The Judge noted mediators brokered other settlements with other Wall Street creditors totaling billions of dollars.

The trial on confirmation of Detroit’s Plan of Adjustment will start next Tuesday. It is expected to last a month. 

Read the document below: 

Syncora Motion, 8/28/14

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