August 19, 2014 at 10:47 am

City lawyers accuse bond insurer of 'distortions,' 'half-truths' in Detroit's bankruptcy case

Detroit — A bond insurer on the hook for hundreds of millions of dollars in Detroit’s bankruptcy is desperate, underhanded and should apologize for accusing mediators of engineering a "fraudulent" grand bargain to rescue pensioners and preserve city-owned art, the city said late Monday.

The city’s legal team struck back one week after bond insurer Syncora Guarantee Inc. accused Chief U.S. District Judge Gerald Rosen and lawyer Eugene Driker of being “agenda driven, conflicted mediators who colluded with certain interested parties to benefit select favored creditors to the gross detriment of disfavored creditors.”

“Desperation is seldom pretty, and here it is particularly ugly as it has led Syncora into a strategy of distortions, half-truths, and outright falsehoods,” the city’s lawyers wrote late Monday.

The city’s filing continued a pattern of Detroit and Syncora trading toxic legal briefs on the eve of an Aug. 29 trial over whether the city’s restructuring plan is fair and feasible. The plan to shed more than $7 billion in debt, has won widespread support among unions, retirees and other creditors — but not Syncora.

The city’s bankruptcy lawyer said Syncora crossed the line in alleging a conspiracy among Detroit and mediators.
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