CHICAGO -- Bond insurer Syncora Guarantee Inc.'s appeal of a key Detroit bankruptcy settlement has been assigned to a judge.
Syncora last month appealed U.S. Bankruptcy Judge Steven Rhodes' April ruling in favor of a settlement with the city and its interest-rate swap counterparties. Syncora insures the swaps, as well as a piece of the $1.4 billion of pension certificates of participation that the swaps hedge.
The banks that hold the certificates have also appealed the decision.
Thursday, the appeal was officially assigned to U.S. District Judge Bernard A. Friedman. Syncora filed the appeal to the U.S. District Court for the Eastern District of Michigan, Southern Division.
Rhodes' ruling supports the deal calling for Detroit to pay UBS AG and Merrill Lynch Capital Services Inc. $85 million to avoid termination of the swaps, estimated at roughly $288 million.
Rhodes had rejected two previous deals the city made with the counterparties.
The banks and Financial Guaranty Insurance Co., which insures the bulk of the pension certificates, are fighting Detroit's related lawsuit that seeks to invalidate the pension certificates, arguing that they were illegally issued in the first place.