CHICAGO — Detroit's chief bankruptcy mediator has ordered Financial Guaranty Insurance Co., one of the last holdout creditors in the city's Chapter 9 bankruptcy case, into talks with the city and other major creditors Friday.

Detroit reached an agreement in principal with Syncora Guarantee Inc. on Tuesday, and the city was to meet with Syncora and other creditors on Thursday in court-ordered mediation.

If the Syncora settlement is finalized, it would leave FGIC the last remaining creditor who has not settled with the city.

US District Chief Judge Gerald Rosen, the chief mediator, ordered that FGIC join the negotiations on Friday. The goal is to resolve a dispute on $1.5 billion of pension certificates of participation the city is trying to repudiate, one of the last hurdles blocking the city's smooth exit from bankruptcy.

FGIC insures roughly $1.1 billion of certificates of pension the city is trying to repudiate. Syncora holds just under $400 million of the COPs.

Other creditors joining Syncora and Detroit on both Thursday and Friday include Ambac Assurance Co. and Blackrock, which wrap and hold the city's limited-tax general obligation bonds, and a committee representing retirees. Those creditors need to sign off on the Syncora settlement as stipulated in their own, separate deals with the city.

UBS AG and Merrill Lynch Capital Services, the two banks that are the counterparties on interest-rate swaps that Syncora insures, are also part of the talks. Syncora said it won't sign off on the settlement unless the banks release them from responsibility for paying off the swaps.

The parties required to join talks on Friday include: The City of Detroit, Syncora Capital Assurance, Inc., UBS AG, SBS Financial Products Co., LLC, Merrill Lynch Capital Services, Inc., Ambac Assurance Corp., Black Rock Financial Management, Official Committee of Retirees, Wilmington Trust Company, NA, as successor to U.S. Bank NA, as Trustee and Contract Administrator, and Financial Guaranty Insurance Corporation.

 

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