Michigan Attorney General Bill Schuette is jumping in the fight to prevent one of Detroit’s major creditors from accessing the personal financial records of city retirees.
Bond insurer Syncora Guarantee Inc. is on the hook for hundreds of millions of dollars if Detroit’s plan for exiting bankruptcy moves forward.
Syncora maintains that the city’s plan of adjustment unfairly favors retirees over some bondholders. Both groups are classed as unsecured creditors in federal bankruptcy court.
The company has fought tooth-and-nail to bring down the proposed “grand bargain." That's a plan to use more than $800 million in state and foundation dollars to minimize pension cuts, and protect the Detroit Institute of Arts’ collection from a potential fire sale.
Recently, Syncora served the city with a demand for information about the personal income and assets of all 20,000 Detroit retirees—a request city lawyers called “outrageous.”
“Syncora’s outsized approach to discovery has shown it will stop at nothing to sabotage the Grand Bargain and derail the city’s Plan of Adjustment,” lawyers wrote in court filings this week. “But its latest discovery effort crosses the line.”
Schuette also filed a formal objection in bankruptcy court Friday, calling Syncora’s effort “an invasion of privacy.”
“The question of any retiree’s individual financial condition should not factor into this Court’s decision,” Schuette said in a statement. “They are entitled to more than any other creditor. This is true regardless of their financial condition.”
Detroit retiree Juanita Hernandez agrees that Syncora has no right to access the personal finances of individual retirees.
“The question here is the retirement money you’re entitled to,” Hernandez said. “Not how or where you made your money, or invested, or didn’t invest.
“If they’re asking us to invest in their company, that’s one thing. But to investigate us, to see how much money we have…no. That’s wrong.”
Judge Steven Rhodes has set a hearing to decide the issue next week.