July 30 A federal appeals court panel heard
arguments on Wednesday between Detroit and one of its last
hold-out creditors over casino tax revenue, with one of the
judges promising a careful consideration of the case, the
Detroit News reported.
The appeal by Syncora Guarantee Inc of a July 11 U.S.
District Court's ruling that affirmed Detroit's access to the
money was the first case tied to the city's historic bankruptcy
case to be argued in the 6th Circuit U.S. Court of Appeals in
Syncora, which insures some of the city's pension debt and
interest-rate swaps, had initially 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 bond
insurance company had tried to block.
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 those agreements to hedge
interest-rate risk on pension debt, agreed in a settlement
earlier this year to pay $85 million to the swap providers.
Syncora has maintained the settlement would cause it financial
U.S. Appeals Court Judge Raymond Kethledge said a provision
that Syncora contended allows the money to be trapped by
creditors was "fairly draconian," suggesting there should be an
alternate remedy, the newspaper reported. Judge Julia Smith
Gibbons, another member of the three-judge panel, did not give a
time frame for a ruling but said the panel would consider the
arguments "carefully," the report added.
The appeals court had initially scheduled oral arguments for
Wednesday on seven other cases that appealed Rhodes' December
ruling that Detroit was eligible to file the biggest municipal
bankruptcy in U.S. history. But those proceeding were canceled
at the request of the city and the appealing parties due to
actual or pending settlements.
Judge Gibbons late on Tuesday gave all the appealing
parties, which include city pension funds and unions, a Thursday
deadline to inform the court if they want to dismiss their
(Reporting by Karen Pierog; Editing by Dan Grebler)