Federal judge affirms Detroit's access to casino revenue
(Reuters) - A U.S. District Court judge on Friday ruled that bond insurer Syncora Guarantee Inc cannot block bankrupt Detroit's access to casino tax revenue.
Syncora, which insures some of the city's bonds and interest-rate swaps, appealed an Aug. 28, 2013 ruling by U.S. Bankruptcy Judge Steven Rhodes that gave Detroit access to about $11 million in monthly tax revenue that the insurance company had tried to block.
Judge Bernard Friedman said that Rhodes had correctly decided that the disputed money was part of the bankruptcy estate.
Syncora's attorney, James H.M. Sprayregen at law firm Kirkland & Ellis LLP, said an appeal will be filed with the U.S. Sixth Circuit Court of Appeals.
The company claims it has a lien on the money, which had been used as collateral since 2009 to secure the swap agreements. Detroit, which entered into those agreements to hedge interest-rate risk on pension debt, agreed to a settlement earlier this year to pay $85 million to the swap providers.Syncora has maintained the settlement would cause it financial harm.
After its appeal of Rhodes' casino revenue ruling languished in district court, Syncora last month turned to the federal appeals court, which on July 2 ordered Friedman to rule. The appeals court also set a tight, three-day deadline for filing an appeal of Friedman's ruling.
Detroit has been reeling in settlements with most of its major creditors as the city works its way through the biggest municipal bankruptcy in U.S. history, leaving Syncora as one of the few remaining hold outs.