CHICAGO - Detroit shot back at Syncora Guarantee Inc. in a new court filing that argues the insurer should be forced to apologize for accusing federal mediators of tainting the bankruptcy case.
The city on Aug. 19 filed a motion asking Bankruptcy Judge Steven Rhodes to strike part of Syncora's objection to the city's confirmation plan, which the insurer filed last week.
The city wants Rhodes to strike the portion where Syncora calls the mediation process that led to the so-called "grand bargain" at the center of the city's bankruptcy exit plan unethical, biased, and tainted by politics.
"It is nothing less than a desperate, last-ditch effort to use under-handed tactics to derail the Plan, a plan which numerous classes of creditors have already accepted — including classes of financial creditors," Detroit's Jones Day attorneys argued in the brief. "On its face, this claim is not only wrong, but is built on a foundation of falsehoods and distortions that appear calculated to generate publicity and to inflict damage on those working to settle the bankruptcy case rather than to serve any real litigation purpose."
The city asked Rhodes to consider sanctions against the insurer or forcing it to issue a formal apology.
The filing marks the latest in a series of barbed court filings between Detroit and Syncora, the city's staunchest opponent during the 12-month bankruptcy case.
Syncora, in its objection to the confirmation plan, notes that the wife of one of the federal mediators, Eugene Driker, was a long-time member of the Detroit Institute of Arts board and that the chief mediator, Judge Gerald Rosen, has openly opined that the retirees should be favored among the creditors.
Detroit argued that the insurer has long known about the possible Driker conflict, which was disclosed last September, and has never raised an objection to the judge or the mediators until now.
"At the very least, the city asks this court to strike the 'scandalous' allegations contained in Syncora's pleading for being reckless at best, if not willfully malicious," the brief says. "In addition, this court may wish to consider ordering Syncora and its attorneys to issue a formal public apology to Mr. Driker and Chief Judge Rosen, whose conduct and reputations have been falsely impugned."