The Syncora Apology…and what the judge said about sanctions

The Syncora Apology…and what the judge said about sanctions

Bond insurer Syncora has apologized to mediators in the Detroit bankruptcy case. Because of that, Judge Steven Rhodes decided attorneys for the Bermuda-based company will not face sanctions. Here’s what he said:

The court had entered an order to show cause directed to Syncora and its attorneys why they should not be sanctioned for the scandalous and defamatory aspect of their second supplemental objection to the plan. In the meantime, Kirkland and Ellis, on behalf of itself and Syncora, has apologized to Judge Rosen and to Mr. and Mrs. Driker for its conduct. The court concludes that those apologies in the interest of justice resolve the issue of sanctions and accordingly, the court here today will be entering and order that vacates the order to show cause and dispose of that issue.

Here is Syncora’s apology.

Last month, Syncora’s attorneys in a court filing criticized  Chief U.S. District Judge Gerald Rosen for showing “naked favoritism” toward pensioners while leading negotiations between the city and the creditors. Syncora has argued for months that the Detroit Institute of Arts collection should be monetized to pay all creditors, not protected as it is in the “grand bargain” which also brings outside funding to the city’s pension funds.

Syncora accused Rosen and an additional mediator, Eugene Driker, of being “agenda driven, conflicted mediators who colluded with certain interested parties to benefit select favored creditors to the gross detriment of disfavored creditors.”  The city asked the judge to strike Syncora’s filing from the record and to sanction the creditors’ attorneys. 

Rhodes rejected Syncora’s claims and ordered the creditor’s objection be struck from the case docket. “Syncora’s highly personal attack on Chief Judge Rosen in the objection was legally and factually unwarranted, unprofessional and unjust,” Rhodes wrote. “Justice requires the court to strike the attack from its record.” The judge had also ordered Syncora attorneys to explain to him why they should not face sanctions.

Now, with the settlement reached and the apology filed, Rhodes won’t force the bond insurer attorneys to do that. Here’s the order he issued late today.

Syncora Notice of Settlement – and Apology