From Syncora, an appropriate apology
Courtrooms are naturally adversarial places, where things often get said in the heat of an argument that are later regretted or retracted. But the comments made by the Syncora bond insurance firm during the Detroit bankruptcy trial took the normal give-and-take to an inappropriate level.
Snycora apologized for its slurs against the judges and mediators in the case, and rightfully so. But the remorse didn’t come until after a settlement was reached with the city of Detroit that gave the insurer a far fatter payout than had been initially offered.
The apology apparently has been accepted, since bankruptcy Judge Steven Rhodes has dropped his threat of sanctions against Syncora. He’s letting the company off easy in the interest of wrapping up Detroit’s bankruptcy.
Syncora was a rabid critic of the “grand bargain,” the deal that leveraged $816 million in philanthropic and state funds to save the collections of the Detroit Institute of Arts and spare city retirees from much deeper cuts to their pensions.
The objection was fair enough — Syncora argued the court was treating creditors within the same class differently, in violation of bankruptcy law.
It ignored the plausible reasons for accepting the grand bargain, including that the DIA is an essential asset to the quality of life in the city, and that retirees are less able to absorb the pain of cuts than are large financial institutions such as Syncora.
Instead, Snycora accused Detroit Chief Federal Judge Gerald Rosen and attorney Eugene Driker, who mediated the settlement, of underhanded conduct. The company argued Rosen and Driker ignored the law to design a settlement that benefited pensioners over financial creditors. It also accused Driker of having a conflict of interest because his wife once sat on the DIA board.
These were scurrilous personal attacks that have no place in the courtroom, and risked undermining public confidence in the integrity of the bankruptcy process.
Snycora is now calling Rosen’s efforts “Herculean,” which they were, and crediting his remarkable skill in bringing the case toward resolution. Its attorneys also acknowledged they were mistaken in targeting Driker’s wife.
Rhodes’ decision to accept the apology and drop the sanctions hearings spares Syncora from a much deserved spanking for its rash remarks and disrespect of the court.