| July 5
July 5 The city of Detroit has filed a lawsuit
against bond insurer Syncora Guarantee Inc, claiming the company
is blocking an agreement the city hopes to conclude with major
creditors, the Wall Street Journal reported on Friday.
The suit filed on Friday by Detroit's state-appointed
emergency manager, Kevyn Orr, focuses on the city's estimated
$170 million a year casino tax revenue, the paper said. The city
maintains Syncora told a bank that controls the funds not to
give the money to Detroit.
Representatives of Syncora could not be reached for comment.
Orr declined to confirm to Reuters whether the city had
filed suit, but he did say: "Syncora was interfering with the
city's ability to restructure."
Orr's spokesman, Bill Nowling, confirmed the lawsuit had
been filed, but would not provide any details.
Detroit has some $18.5 billion in long-term debt and Orr was
appointed by Michigan Governor Rick Snyder to fix the city's
financial crisis. Orr has sweeping powers and is trying to
conclude deals with creditors to avoid bankruptcy.
The WSJ reported that Detroit sees Syncora as standing in
the way of a proposed deal to pay UBS AG and Bank of
America Merrill Lynch more than 70 cents on the
dollar on nearly $340 million in secured debt, citing sources
familiar with the matter. In return, Detroit would receive $11
million a month in tax revenue from its three casinos, funds
that were used as collateral to back the debt.
The WSJ cited the emergency manager's office as saying Wayne
County Circuit Judge Jeanne Stempien had issued a temporary
restraining order saying the casino funds could be released to
the city and set a hearing on the issue for July 26.
The Wayne County clerk could not be reached for comment.