Detroit bankruptcy trial resumes after settlement
DETROIT (AP) — A judge refused to extend a timeout Monday in Detroit’s bankruptcy trial after a deal with a major creditor removed another opponent from the city’s plan to exit the largest Chapter 9 case in U.S. history.
A bond insurer, Financial Guaranty Insurance, said it needs more time to craft trial strategy after another insurer ironed out a settlement with Detroit. But Judge Steven Rhodes said Financial Guaranty should have been prepared to lose an ally, and he resumed the trial with testimony from a pension actuary.
The trial was suspended last Wednesday so Detroit and Syncora could reach an agreement. Syncora is getting cash and long-term leases on a parking garage and the tunnel between Detroit and Canada, among other concessions.
The settlement will help “return the city to its citizens,” said Detroit attorney David Heiman, adding that Syncora and the city “have laid down their swords.”
Syncora and Financial Guaranty have been the most aggressive opponents in Detroit’s bankruptcy, especially because the city is refusing to sell art to pay debts.
The judge is hearing evidence to decide whether the overall bankruptcy exit plan is fair to creditors and feasible in the years ahead. Thousands of retirees would see a 4.5 percent cut in their pension.
Separately, Syncora lawyers from the Kirkland & Ellis firm in Chicago apologized to two mediators who brokered a deal that prevents the sale of art and improves the city’s pension funds.
Syncora had accused Gerald Rosen, a federal judge, and Eugene Driker, a local lawyer, of “naked favoritism.” They were accused of stiffing other creditors in order to help retirees and the Detroit Institute of Arts.
Syncora lawyers in a summer court filing had also taken a jab at Driker’s wife, Elaine, who is a former museum trustee. Rhodes called the filing “scandalous and defamatory.”
“We are deeply sorry for the mistake we made and for any unfounded aspersions it may have cast on Chief Judge Rosen and the Drikers,” Syncora attorney James Sprayregen said in a filing Monday.
Follow Ed White at http://twitter.com/edwhiteap