Detroit — A bond insurer Friday signaled it will appeal a ruling by Detroit’s bankruptcy judge allowing the city to borrow $120 million to pay for public safety and computer upgrades and argued a loan backed by casino revenues might violate state laws.
The appeal notice from bond insurer Syncora Guarantee Inc. indicated Detroit will face a new fight to access money for the city’s revitalization after losing a bid to pay off a costly pension debt deal. In the meantime, Syncora wants to block Detroit from closing on the loan with London-based investment bank Barclays.
The moves came one day after U.S. Bankruptcy Judge Steven Rhodes said Detroit could borrow $120 million from Barclays. In doing so, Rhodes rejected a larger loan and a $165 million settlement with two banks to terminate a troubled pension debt deal.
Syncora indicated it would appeal the judge’s decision to let Detroit borrow the $120 million. In the meantime, the bond insurer wants Rhodes to prevent Detroit from closing on the loan, according to a bankruptcy filing Friday.
The bond insurer wants time to evaluate the loan and asked Rhodes to set a hearing.
The loan would pay for so-called quality of life upgrades and be secured by revenue from the city’s three casinos.
Syncora was the lead bond insurer fighting a $165 million settlement that was rejected by Rhodes on Thursday.
The New York-based bond insurer said in court records it faced the prospect of “massive” losses because it was “a participant in every facet” of the pension debt. Syncora's losses could have exceeded $300 million, court records show.