Detroit — A holdout creditor is trying to blow up the grand bargain softening pension cuts and shielding Detroit’s art collection from creditors by making a last-minute objection, the city’s bankruptcy lawyer said Monday.

City lawyer Thomas Cullen accused bond insurer Syncora Guarantee Inc. of sandbagging and trying to scuttle the grand bargain, a key element of Detroit’s plan to shed about $7 billion in debt and end the biggest municipal bankruptcy in U.S. history.

The fight between Detroit’s legal team and Syncora served as a final preliminary battle before the city’s landmark bankruptcy case goes on trial Sept. 2. Syncora has called the grand bargain a “fraudulent” plan to rescue city pensioners and preserve city-owned art at the expense of other creditors.

"It is sandbagging the whole state of Michigan,” Cullen told U.S. Bankruptcy Judge Steven Rhodes during a hearing Monday. It is “sandbagging of an Olympic sort.”

Rhodes said he would rule soon on a request by Detroit to strike Syncora’s allegations, which include claims that Chief District Judge Gerald Rosen and attorney Eugene Driker are “agenda driven, conflicted mediators.” The city also has said sanctions against the bond insurer’s lawyers might be appropriate.

Syncora has consistently criticized the “grand bargain” plan to pump $816 million into Detroit’s pension funds. The money is a mix of private and public funds.

Driker’s wife is an emeritus member of the DIA’s board of directors, which Syncora’s attorneys called an “undisclosed personal interest in protecting the interests of the DIA.”

Not so, the city said. Rosen disclosed the wife’s DIA role in September.

On Monday, Syncora lawyer Stephen Hackney said it was not obvious Driker was working to save the Detroit art collection and, as previously disclosed, mediate pension disputes. The mediation efforts were private and confidential, Hackney said, adding that he recently learned about Driker’s involvement through an “extensive” media tour waged by mediators.

“We didn’t know what Driker was doing,” Hackney said.

Cullen, the city’s lawyer, faulted Syncora for springing a last-minute objection to the city’s debt-cutting plan

“They have apparently hid or kept secret this dramatic revelation … until the last possible, and most potentially destructive moment,” Cullen told the judge. “This is an attempt to hit this process and this court with a blunt object to get what they want.”

Syncora really wanted the media to publish allegations about “agenda-driven” mediators and a corrupt grand bargain, Cullen said.

The bond insurer and Financial Guaranty Insurance Company backed a troubled pension debt deal and face hundreds of millions in potential losses under Detroit’s debt-cutting plan. Syncora has pushed for the sale of Detroit art so creditors can reap larger returns in the bankruptcy case and Hackney on Monday repeatedly called his clients “the hated Syncora.”

“I’m thinking about the problem when you’re a hated minority,” Hackney told the judge. “That can be bias that creeps into the system.”

Earlier Monday, Rhodes approved a deal to refinance about $1.5 billion in Detroit water bonds.

Rhodes approvedthe deal three days after Detroit’s water commissioners voted to accept offers to buy back about 28 percent of $5.2 billion in outstanding water and sewer bonds.

The bond deal is intended to free up cash for Detroit’s restructuring and potentially speed an exit from bankruptcy court. The deal also would lower the Detroit Water and Sewerage Department’s interest rate, slash costs and potentially save customers across the region millions of dollars.

The judge’s approval came after he listened to about two hours of testimony from several witnesses, including Detroit Emergency Manager Kevyn Orr. He testified that the deal would lower the city’s debt service and free up “much needed cash for the city.”

“Is this a good deal?” Detroit bankruptcy lawyer Robert Hamilton asked.

“Yes, sir,” Orr said.

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