Syncora appeals bankruptcy judge's order on Detroit casino revenue

Reuters

DETROIT, Oct 10 (Reuters) - Syncora Guarantee,which insured payments by Detroit on some of its interest-rateswaps, on Thursday appealed a bankruptcy court order thatallowed Detroit continued access to casino revenue that the citysays it needs to avoid running out of cash.

Syncora had tried to block Detroit from accessing anestimated $11 million in monthly tax revenue from the city'sthree casinos, claiming it had a lien on the money, which hadbeen used as collateral since 2009 to secure the city'sinterest-rate swap agreements. Detroit's emergency manager,Kevyn Orr, and one of his top consultants said in sworndepositions that the casino revenue is key to city's survival.

Syncora on Thursday filed an appeal in U.S. district courtin Detroit of an Aug. 28 ruling by Bankruptcy Judge StevenRhodes granting the city access to the casino funds.

Detroit filed the largest municipal bankruptcy in U.S.history in July, and it is struggling to overcome more than $18billion in debt and other obligations.

Syncora is also one of several bond insurers and othercreditors that are objecting to a deal Detroit struck withMerrill Lynch Capital Services and UBS AG toend interest-rate swap agreements.

Detroit wants to end the agreements at a discount and freeup the contested casino revenue, which was used as collateralfor the swaps. The city hopes to use the funds to arrangeso-called debtor-in-possession financing that would allowDetroit to settle with the swap counterparties and makeinvestments in the city.

Rhodes was scheduled to hold hearings on the proposedagreement last month but postponed them indefinitely atDetroit's request to give the city more time to negotiate withits bond insurers and other creditors. The hearings have not yetbeen rescheduled. [ID: nL2N0HJ1TE]

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