County’s Bankruptcy Threat To Syncora
Alabama’s bankrupt Jefferson County agreed on Wednesday [Feb.15] to a temporary hike in debt payments after lawyers for Syncora Guarantee Inc said the Bermuda-based bond insurer’s survival was threatened by shrunken payments on the county’s $3.14 billion of sewer debt.
The Reuter news agency reports lawyers for creditors and Jefferson County, which last year filed the biggest US municipal bankruptcy case, said the county would pay $5.5 million monthly through May to service its sewer debt. Just over $5.25 million will be paid for February, lawyers said in a joint statement.
The county had reduced the payments to owners of its sewer system warrants by $9 million after January 6, when it regained control from a court-appointed receiver of the county’s sewer system that was the main driver of its bankruptcy filing.
Lawyers for Syncora and other insurers responsible for any shortfall in the county’s debt service accepted the deal during a bankruptcy court hearing in Birmingham, Alabama.
“It appears to be a useful and equitable solution of the issues,” said Lawrence Larose, an attorney for the Assurance lawyer Assured Guaranty Corp that had supported a Syncora motion for higher payments by Jefferson County.
Syncora, a unit of Bermuda’s Syncora Holdings, said in legal filings that the shortfall in county payments that it was obliged to replace had deeply rattled the firm.
“Syncora believes its very viability as a going concern may be threatened …,” Syncora lawyers said.
