After the Detroit bankruptcy hearing this morning, Syncora attorney Ryan Bennett talked with reporters on the sidewalk outside the federal courthouse. Here’s the audio of the interview…and the transcript.
The reporters’ names are hyperlinked to their latest work on the case.
Jim Kiertzner (WXYZ, Channel 7): How did you reach the settlement?
Ryan Bennett: The settlement was reached in the context of mediation with the assistance of the mediators, active involvement by the city and a lot of creative, constructive thought went into it to unlock value where that value otherwise wasn’t necessarily, readily apparent, and Syncora used some of its current existing business model in connection with its infrastructure assets that it already holds to identify certain things that haven’t already been spoken for in the context of the grand bargain or the plan that’s set up currently.
JK: When you say “creative,” I don’t want you to go into the nitty gritty but was there a lot of back and forth, a lot of bartering, if you will
RB: It certainly was an iterative process, no doubt about it. Very arms length, Very negotiated. And it’s still ongoing. We still have a component, at least on key component that needs to be negotiated and hopefully achieved with the city’s swap banks, UBS and Bank of America, and we’re hopeful we can get the closure from those banks that we’re looking for (that) they’re getting in connection with Detroit. We’d like that also and that’s where we want to move forward over the next 48 hours.
JK: How do you respond to someone who says ‘this boggles the mind: you were the fiercest competitor and now you’ve reached this deal’?
RB: Right. All along we’ve been very constructive. All we’ve looked for and I think you’ve heard from my colleagues, and you’ve heard us in court, is to be treated fairly. We were never against Detroit. We were just against this plan as it was set up to treat us and creditors similarly situated like us. We’ve structured an arrangement where we believe we’re getting more on account of our Class 9 claims, our COP-insured claims as well as to improve the commercial terms of existing business relationships that we already have with the city with respect to the tunnel lease, for example.
JK: We’ve been told this moves you from around 9 ½, 10 cents on the dollar to 20 cents on the dollar. Is that correct?
RB: That’s hard to pin down because part of this recovery on part of our COPs claim which is distinct through recovery on account of our COPs claim which is distinct from recovery or benefits that we may be getting from separately negotiated commercial transaction which is the lease amendment with respect to the Windsor Tunnel.
JK: Can you tell us what this means in approximate real dollars. We’ve heard everything from about $400 million now down to $200 million. Can you ballpark that for us?
RB: I really can’t because again, they are two distinct transactions. There’s recovery we’re getting on account of our COPs claim and then there’s improved or newly negotiated terms with respect to the existing Windsor Tunnel lease and those are two separate things. How we’ve structured it is a recovery on our Class 9 COPs claims and then separately a development agreement where we’ve agreed with an amended terms for the Windsor Tunnel to take certain properties or potentially take certain properties and do certain things to them to improve them and help develop Detroit and develop the riverfront.
Joe Guillen (Detroit Free Press): Would that be the Joe Louis site?
RB: That is not currently in the package but it’s something that we would consider as a potential future transaction.
JK: Ford Auditorium on the riverfront?
RB: That’s still unclear at this point.
JK: What about other RF properties?
RB: There are other properties, they’re detailed in the agreement that was sent to the city council and we can provide you with a copy of them.
Sandra Svoboda (WDET/NextChapterDetroit.com): What about the COPS litigation?
RB: As part of this settlement to the extent it’s ultimately approved and finalized, Syncora is settling its disputed COPs claims and we would agree to a settled treatment on account of those claims.
SS: And all the other appeals would go away too?
RB: That is correct. It would be a complete stand down and a switch of sides. We would be coming over to support the city in all of its endeavors.
JK: How much does this shorten the bankruptcy trial?
RB: We think it does shorten the trial significantly.
JK: How many witnesses did you have?
RB: We had in the 20s. My trial partners are the ones who can speak more specifically to it. The witnesses, when I say we have 20 witnesses, those are both witnesses that we’re presenting as well as witnesses that we’re crossing in connection with the city’s case. We think it’s significant for the city, significant value. It also tees up a scenario where the city will be best positioned to potentially negotiate a deal with FGIC.
JK: I was going to ask about about FGIC. They’re the next big one yet to fall: one down one to go. What’s your prediction with them?
RB: I think FGIC all along has attempted to be constructive here and wanted to be constructive just like Syncora. I can’t speak for them specifically but I do think this provides an environment where hopefully they can reach a deal. It remains to be seen.
Christine Ferretti (The Detroit News): What’s left for them at this stage now that you guys have come to some terms?
RB: There’s certainly what we call the shared pool, the asset pool that is provided to COPs claims. These are some revenues from parking, the B notes, which are the currency that was set aside for the COPs and potentially these what we call “plan credit vouchers” where they can be used for purposes of buying assets that the city may later put up for proposals.
JK: So does FGIC get a piece of that action?
RB: If it’s willing to settle. That’s up to the city and FGIC. Right now they’re currently not settled and they’ll have to decide if that’s something they want to share in. The city has not to my knowledge put forth a proposal to FGIC for settlement and I don’t know where that stands with respect to FGIC either.
JK: You mentioned upstairs in court you’re partnering with the city of Detroit for the future with some of these ongoing projects.
RB: We are. Our American Roads subsidiary, which holds the lease to the Windsor tunnel or at least this half of the Windsor tunnel, is a national corporation with multiple concessions around the country. It happens to be headquartered here in Detroit. We want to keep that headquarters here, we want to keep those jobs here and we look forward to expanding our presence in Detroit as we go forward.
JK: The partnership with the parking at Grand Circus Park, that’s another partnership?
RB: That’s correct, if we can fold that in. We’re still doing due diligence in deciding whether that’s something we want to pursue or just hold the option for. But that would be the type of infrastructure partnership that we would look to do.
SS: How many jobs is that?
RB: I believe they employ about 100 people
CF: For American Roads?
RB: Yes, I can check that.
SS: What do they do besides the tunnel?
RB: They’ve got concessions around the country, They’ve got the Alabama toll road and other similar infrastructure type of concessions. But again the headquarters is here and if we can maintain this settlement and get the extension that we’re looking to get on the tunnel, we’re going to keep that headquarters here. In fact, we’re going to expand it.