Syncora Guarantee Inc. objected to a request on behalf of creditors of Jefferson County, Alabama, that would force the bankrupt county to make immediate payment on about $792 million of its sewer warrants.
Syncora, a bond insurer, said in a filing yesterday in U.S. Bankruptcy Court in Birmingham that a group of creditors, who bought the warrants at a discount and who have refused to forbear from receiving principal payments on warrants that can be mandatorily redeemed, are trying to exert pressure on the company and other insurers of the bonds.
“Disturbing the status quo, and trying to coerce the insurers to suffer near-term exposure that would otherwise be resolved pursuant to a plan of adjustment will do nothing for achieving consensus,” Syncora said in the filing.
The Bank of New York Mellon Corp., the trustee for Jefferson County’s $3.2 billion in sewer bonds, last month sought a judge’s ruling it’s entitled to seek accelerated payment on the county’s debt.
The bank is responsible for collecting payments from the bankrupt county and passing them on to investors. It informed warrant holders on Feb. 1 that it would suspend payments on at least part of the $3.2 billion of debt from the county’s insolvent sewage system after some creditors no longer consented to a payment formula.
The case is In re Jefferson County, 11-05736, U.S. Bankruptcy Court, Northern District of Alabama (Birmingham).