Detroit’s bankruptcy attorneys want a judge to block an aggressive creditor from gaining access to the personal financial information of 20,000 retired city workers.
In their latest legal tussle with bond insurer Syncora Guarantee Inc., city attorneys said the “billion-dollar insurance” company’s request “crosses the line” in its quest to discredit a plan to limit pension cuts at the expense of other unsecured creditors.
“Although it is still early, Syncora’s outsized approach to discovery has shown it will stop at nothing to sabotage the Grand Bargain and derail the city’s Plan of Adjustment,” city attorney Deborah Kovsky-Apap wrote in a court filing late Wednesday night.
On Thursday, U.S. Bankruptcy Judge Steven Rhodes set a hearing on the issue for June 26.
Michigan Attorney General Bill Schuette, who has endorsed the “grand bargain” for Detroit pensioners, said Thursday he will oppose Syncora’s attempt to gain access to retiree financial information.
“Detroit’s retired cops and firefighters worked all their lives to protect us and now their privacy needs to be protected,” Schuette said in a statement.
Syncora is a Bermuda-based bond insurance company facing the prospect of losing hundreds of millions of dollars if Detroit is successful in wiping out a Kwame Kilpatrick-era pension debt deal that is blamed for plunging the city into bankruptcy.
The insurer has been aggressively seeking a sale of city-owned art and has made numerous legal moves in Detroit’s 11-month-old bankruptcy to slow the city’s efforts to exit Chapter 9 proceedings.
More than 32,000 retired and active city workers are eligible to vote on the city’s plan to reduce their pension benefits — a plan the city’s largest labor union endorsed last Friday.
Syncora has served the city with 80 document requests, some of which Rhodes called “unreasonable” earlier this month when he delayed a planned trial over Detroit’s debt-cutting reorganization plan by three week.
“The only possible explanation for this outrageous request is that Syncora is attempting to gain a litigation advantage by harassing, oppressing and embarrassing the city and its retirees,” Kovsky-Apap said.
Syncora attorney William Arnault said the bond insurer would accept information about retiree finances that does not identify them by name and just lists the town and state they live in.
“In short, we are trying to determine the extent of the city’s knowledge regarding the location and financial position of the city’s retirees,” Arnault wrote in a June 12 email to city attorneys.
The city’s attorneys attached the email as an exhibit in Wednesday’s court filing.
Detroit attorney Greg Shumaker replied to Snycora’s legal team at a Chicago law firm, saying in a June 13 email that the request for the personal financial standing of retired city workers is “irrelevant, overly burdensome and personally intrusive information.”