Detroit and its major hold-out creditors were ordered on Tuesday into mediation, just a week before a key federal court hearing is to start in the city's historic bankruptcy case, Reuters reported yesterday. The move followed a Monday hearing before Hon. Steven Rhodes on Detroit's objection to bond insurer Syncora Guarantee Inc.’s allegations of improper conduct and conflicts of interest in the case by court-appointed mediators. U.S. District Court Judge Gerald Rosen set a Wednesday and possibly Thursday mediation session over $1.4 billion of certificates of participation (COPs) that Detroit sold in 2005 and 2006 to pay its pension liability. The session will include bond insurers that guaranteed payment on the COPs — Syncora and Financial Guaranty Insurance Co.
