Detroit Bond Insurer Seeks Delay of $120 Million LoanSteven Church
Syncora Guarantee Inc. asked the judge overseeing Detroit’s record $18 billion bankruptcy to delay the city’s plans to borrow $120 million while the company challenges the court’s approval of the loan.
Syncora, which insures bonds issued by Detroit, said it fears the city will close on the loan before the company has a chance to appeal. The loan terms, and any alternative deal, may violate Michigan law, New York-based Syncora said yesterday.
“This court should hear any such objections” before the loan is made, the company said in a filing in U.S. Bankruptcy Court in Detroit.
U.S. Bankruptcy Judge Steven Rhodes yesterday rejected part of a $285 million financing package from Barclays Plc that was to pay for improved municipal services and buy out a swaps contract with UBS AG and Bank of America Corp. Rhodes said the proposed $165 million termination payment for the swaps was too expensive and cut the loan down to $120 million.
Detroit filed the biggest U.S. municipal bankruptcy in July, claiming it didn’t have enough money to cover $18 billion in liabilities while also providing adequate police, fire and other services to the city’s 700,000 residents.
The case is In re City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).