(Adds comment from Syncora attorney, background, paragraphs
July 11 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
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
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.
(Reporting By Karen Pierog; Editing by Chizu Nomiyama and David