One of Detroit’s chief remaining adversaries in bankruptcy said that the city’s exit strategy was tainted by what it called the biases of its chief mediator, the New York Times DealBook blog reported yesterday. Syncora Guarantee, a bond insurer, said in a court filing yesterday that instead of setting aside his sympathies, the chief mediator, Gerald E. Rosen, had said repeatedly that he believed he ought to get the best outcome possible for a single group of creditors — the city’s retirees. The chief mediator in Detroit’s case is also the chief judge of the U.S. District Court for the Eastern District of Michigan, where the historic bankruptcy is being handled. Syncora said that it believed that the chief mediator was acting out of good intentions. But, it said, such compassion must be carefully weighed against the requirement that similar creditors be treated in roughly the same way. Syncora is an unsecured creditor, as are Detroit’s retirees, but Syncora has been offered not only a worse deal than theirs but also one of the worst in the whole bankruptcy: Detroit wants to repudiate debt that Syncora insured, dealing it a total loss of hundreds of millions of dollars.
