(Bloomberg) — An $800 million settlement underpinning Detroit's plan to exit from its record municipal bankruptcy was brokered by biased mediators and should be thrown out, bond insurer Syncora Guarantee Inc. told a federal judge.
Syncora, which may be forced to make up bondholder losses should the plan be approved, filed its objection to the proposal today, as U.S. Bankruptcy Judge Steven Rhodes is to begin a monthlong trial on approving the city's bid to adjust $18 billion in debt.
The plan should be rejected immediately, Syncora argued in court papers, because of flaws in the mediation process that produced the so-called grand bargain settlement. The accord would bring in more than $800 million in exchange for protecting the city-owned Detroit Institute of Arts, or DIA, from creditor liquidation.
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