UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

In re: ) 

 ) Dist. Ct. No. 2:14-cv-13044 

CITY OF DETROIT, MICHIGAN, ) Hon. Bernard A. Friedman 

 ) U.S. District Judge 

 Debtor. ) 

 ) 

SYNCORA GUARANTEE INC. AND 

SYNCORA CAPITAL ASSURANCE INC., 

 

 

)

)

)

)

Bankr. Ct. No. 13-53846 

Hon. Steven W. Rhodes 

U.S. Bankruptcy Judge 

 Appellants, ) 

v. )

)

CITY OF DETROIT, MICHIGAN, 

 

)

)

)

 Appellee. ) 

BRIEF OF APPELLANTS SYNCORA GUARANTEE INC. AND 

SYNCORA CAPITAL ASSURANCE INC. 

Stephen M. Gross 

David A. Agay 

Joshua Gadharf 

MCDONALD HOPKINS LLC

39533 Woodward Avenue 

Bloomfield Hills, MI 48304 

(248) 646-5070 

James H.M. Sprayregen, P.C. 

Ryan Blaine Bennett 

Stephen C. Hackney 

KIRKLAND & ELLIS LLP 

300 North LaSalle 

Chicago, IL 60654 

(312) 862-2000 

Counsel for Appellants 

August 15, 2014 

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INTRODUCTION 

At issue in this appeal is whether the bankruptcy court abused its discretion 

when it denied a motion by Syncora Guarantee Inc. and Syncora Capital Assurance 

Inc. (collectively “Syncora”) requesting to view, or in the alternative, unseal an 

order the bankruptcy court entered sua sponte. That order, which the bankruptcy 

court sealed without a record or explanation, supplemented a prior order to which 

Syncora is bound as a party to mediation. Despite no record and no party 

providing any arguments to refute Syncora’s presumptive right and valid and 

irrefutable reasons for viewing the supplemental order, the bankruptcy court 

perfunctorily concluded, without justification, “that cause has not been shown 

which would warrant the granting of the motion.” The bankruptcy court most 

certainly abused its discretion. 

Under Sixth Circuit law, Syncora has a presumptive right to view the 

supplemental order. And Syncora’s need to view the supplemental order is 

irrefutable. Syncora cannot be simultaneously bound by something and not be 

permitted to see it. The City has repeatedly used the confidentiality provisions in 

the bankruptcy court’s mediation order to limit Syncora’s access to discovery in 

this case. The supplemental order purports to amend or supplement that very 

mediation order, specifically as to the issue of confidentiality. Remarkably 

though, Syncora has been denied the ability to review that order, while, at the same 

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time, have its access to a fair trial seemingly defined by it. Moreover, the content 

of the sealed order may further and substantially support Syncora’s pending 

objections to the City’s plan of adjustment, particularly that the plan has not been 

proposed in good faith. To the extent of such content, by limiting Syncora’s access 

to the sealed order, the bankruptcy court’s ruling further deprives Syncora of its 

fundamental right to object to the City’s proposed plan of adjustment and 

undeniably taints the confirmation process. Absent compelling reasons—and no 

such reasons exist here—Sixth Circuit law requires that Syncora be afforded the 

relief sought in the motion. At a minimum, the bankruptcy court erred by failing to 

articulate its reasons—as required by Sixth Circuit law—for setting aside the 

strong presumption in favor of allowing Syncora to view or, in the alternative, 

unseal the Supplemental Order. 

In light of the bankruptcy court’s clear errors, Syncora respectfully requests 

that this Court either (a) reverse the bankruptcy court’s order denying Syncora’s 

motion or (b) in the alternative, vacate and remand such order with instructions 

that the bankruptcy court must either unseal the supplemental order or provide a 

reasoned decision explaining why it refuses to do so within five days of any 

remand from this Court. 

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STATEMENT OF JURISDICTION 

The bankruptcy court had subject-matter jurisdiction over this proceeding. 

See 28 U.S.C. § 1334(b) (extending bankruptcy jurisdiction over “all civil 

proceedings arising under title 11, or arising in or related to cases under title 11”). 

This Court likewise has subject-matter jurisdiction over this appeal. The 

bankruptcy court entered a final order on July 2, 2014. Bankr. Dkt. No. 5746; see 

also In re Dow Corning Corp., 86 F.3d 482, 488 (6th Cir. 1996). Syncora timely 

filed this appeal under 28 U.S.C. § 158(a) on July 3, 2014. Bankr. Dkt. No. 5759. 

STATEMENT OF THE ISSUE 

 Whether the bankruptcy court erred by denying, without explanation, 

Syncora’s motion requesting to view or, in the alternative, unseal an order entered 

sua sponte that relates to an ongoing mediation to which Syncora is a party. 

STANDARD OF REVIEW 

This Court, sitting as an appellate court, reviews a bankruptcy court’s 

decision whether to modify a sealed order for an abuse of discretion. See Soddu v. 

Procter & Gamble Co., 531 Fed. App’x 686, 692 (6th Cir. 2013). 

STATEMENT OF THE CASE 

On July 18, 2013, the City filed a petition commencing the bankruptcy case 

under chapter 9 of the Bankruptcy Code. On August 13, 2013, the bankruptcy 

court entered an order (the “Original Mediation Order” and, as amended or 

supplemented, the “Mediation Order”) directing parties to submit to mediation. 

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See R-1.1

 On August 20, 2013, and September 3, 2013, the bankruptcy court 

ordered Syncora to submit to mediation under the Original Mediation Order. See

R-2; R-3. As a result, Syncora is bound by the Original Mediation Order, 

including to the extent it is amended or supplemented by any subsequent order. 

On June 12, 2014, the bankruptcy court sua sponte entered the Supplemental 

Order Regarding Mediation Confidentiality (the “Supplemental Order”) under seal. 

Bankr. Dkt. No. 5294. Based on its title, the Supplemental Order relates to 

“mediation confidentiality”, which suggests the order impacts all mediation parties, 

either directly or indirectly, and likely implicates the City’s proposed plan of 

adjustment, which is the subject of mediation and Syncora’s pending objections. 

Upon information and belief, the Court provided the City, a mediation party, with a 

copy of the Supplemental Order. The Court did not provide Syncora with the 

Supplemental Order and Syncora was unable to obtain a copy through informal 

requests. 

On June 16, 2014, Syncora, jointly with creditors Financial Guarantee 

Insurance Company and Hypothekenbank Frankfurt AG, Hypothekenbank 

Frankfurt International S.A., Erste Europäische Pfandbriefund 

Kommunalkreditbank Aktiengesellschaft in Luxemburg S.A. (collectively, the 

 

1

 “R-” cites refer to the record on appeal and correspond to the item numbers 

listed in Syncora’s Designation of the Contents of the Record and Statement of 

Issues on Appeal, Bankr. Dkt. No. 6104. 

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“Creditors”), filed a motion to view or, in the alternative, unseal the Supplemental 

Order (the “Motion”). See R-10. In the Motion, the Creditors emphasized that, 

while they “are mindful that certain sensitive information regarding this case’s 

mediation process may be protected from third parties not subject to the 

confidentiality obligations under the mediation order, the order itself—together 

with its amendments, supplements, or subsequent versions—must be viewable at 

least by the mediation parties.” Id. at ¶ 2. 

On July 1, 2014, the City filed a sparse, one-page objection to the Motion 

(the “Objection”). Bankr. Dkt. No. 5728. The City argues simply that Syncora 

does not need to view the Supplemental Order because, “if the Supplemental Order 

affected the Movants, the City believes that the Movants would have been served 

with a copy of the Supplemental Order.” Id. But the City’s argument, which is 

void of any legal or factual bases, is no argument at all. 

The bankruptcy court declined to set a hearing. Indeed, the day after the 

City filed the Objection, the bankruptcy court entered its nondescript order denying 

the Motion (the “Order”). Bankr. Dkt. No. 5746. In denying the Motion, the 

bankruptcy court stated inexplicably: “A hearing is not necessary for the Court to 

make a determination regarding the creditors’ motion. The Court finds that cause 

has not been shown which would warrant the granting of the motion.” Order at 1. 

This appeal followed. 

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SUMMARY OF ARGUMENT 

Syncora submits that the bankruptcy court committed reversible error in 

denying the Motion. First, the bankruptcy court erred by ignoring Syncora’s 

presumptive right, and its valid and irrefutable reasons for needing, to view the 

Supplemental Order. In fact, neither the bankruptcy court nor any party made any 

attempt to rebut Syncora’s reasons or explain how in the absence of a motion or 

factual record, the bankruptcy court’s need for secrecy—unusual given the 

bankruptcy court is a public forum and bankruptcy law is based on disclosure—

outweighed these reasons. Second, the bankruptcy court erred by entering a terse 

order denying the Motion without a hearing and without providing justification for 

its decision, as required by clearly established Sixth Circuit law. Accordingly, the 

Order should be reversed or, at a minimum, vacated and remanded to the 

bankruptcy court for proper findings. 

ARGUMENT

I. The Order Must Be Reversed Because the Bankruptcy Court Erred by 

Denying Syncora’s Motion Requesting to View or, in the Alternative, 

Unseal the Sealed Supplemental Order. 

A district court has supervisory power over its own records. But its 

discretionary power to seal these records “is not insulated from review merely 

because the judge has discretion in his domain.” Meyer Goldberg, Inc., of Lorain 

v. Fisher Foods, Inc., 823 F.2d 159, 163 (6th Cir. 1987) (citation and internal 

quotation marks omitted). Instead, a bankruptcy court must articulate reasons why 

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the “long-established legal tradition which recognizes the presumptive right of the 

public to inspect and copy” such records should be set aside. Id. (quoting In re 

Knoxville News Sentinel Co., 723 F.2d 470, 473–74 (6th Cir. 1983)) (emphasis 

added). 

As such, the Sixth Circuit has stressed the “importance of affording 

interested persons a reasonable opportunity to be heard before sealing a court 

record,” and held that “[o]nly the most compelling reasons can justify 

non-disclosure of judicial records.” Id. (emphasis in original). This presumptive 

right in favor of public access to judicial records is even stronger when the party 

seeking access to such records is a party in the case and is impacted by the sealed 

record. 

 Despite Syncora having a presumptive right to view the Supplemental 

Order, neither the bankruptcy court nor any party put forth any arguments to 

overcome this presumption. See, e.g., Va. Dep’t of State Police v. Wash. Post, 386 

F.3d 567, 575 (4th Cir. 2004) (stating that the presumptive right to access can only 

be rebutted “if countervailing interests heavily outweigh the public interests in 

access”); Mann v. Boatright, 477 F.3d 1140, 1149 (10th Cir. 2007) (same); 

Raulerson v. Massanari, 25 Fed. App’x 589, 594 (9th Cir. 2001) (same). The 

City’s only response was that “[b]ecause the Supplemental Order was filed under 

seal, the City cannot describe or reveal its contents. Nevertheless, if the 

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Supplemental Order affected the Movants, the City believes that the Movants 

would have been served with a copy of the Supplemental Order.” See Objection at 

¶¶ 2–3. Thus, the City just hid behind the seal. And the bankruptcy court’s 

reasoning was cursory and inadequate. See Order at 1 (“The Court finds that cause 

has not been shown which would warrant the granting of the motion.”). 

Syncora’s need to view the order is irrefutable. Without viewing the 

Supplemental Order, Syncora cannot know what its potential legal rights and 

obligations may be under the Mediation Order or Supplemental Order. And, to 

understand whether the claimed “mediation privilege” repeatedly asserted by the 

City and other parties in this case is valid and applicable, Syncora must first 

understand the parameters of and the terms governing the mediation as may be 

modified under the Mediation Order. Finally, the content of the Supplemental 

Order cannot be kept from Syncora’s view because it may further support 

Syncora’s pending confirmation objection, namely that the “cornerstone” of the 

City’s proposed plan of adjustment—the Grand Bargain—is the product of an 

improper mediation. See Bankr. Dkt. No. 6651. The bankruptcy court accordingly 

abused its discretion by denying the Motion, and the Order must be reversed. 

II. At a Minimum, the Order Must Be Vacated and Remanded Because the 

Bankruptcy Court Failed to Articulate the Reasons for Refusing to 

Allow a Party to View or, in the Alternative, Unseal a Sealed Record. 

Even if the bankruptcy court’s order was not per se an abuse of discretion, it 

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nonetheless erred by failing to articulate its reasons for setting aside the strong 

presumption in favor of allowing Syncora to view or, in the alternative, unseal the 

Supplemental Order. See, e.g., Brown v. Williamson Tobacco Corp v. Fed. Trade 

Comm’n, 710 F.2d 1165, 1176 (6th Cir. 1983) (holding that “the District Court 

erred by failing to state findings or conclusions which justify nondisclosure”); 

Goodman v. Fuller, 960 F.2d 149 (Table) (stating that “[w]here there is a challenge 

to the proprietary of such a seal . . . and the district court, after weighing the 

conflicting interests, remains of the view that curtailment of the public’s right to 

access to the records of its court system is justified, it is essential for the court to 

present a reasoned analysis explaining why.” (emphasis added)). By failing to 

provide justification for the Supplemental Order, the bankruptcy court deprived 

this Court of the opportunity to evaluate whether the bankruptcy court abused its 

discretion when it denied the Motion. See, e.g., Goodman, 960 F.2d at 149 

(vacating an order denying a motion to unseal where the “district court did not 

undertake to make findings or conclusions that would justify nondisclosure to the 

public”); Brown, 710 F.2d at 1176 (same); Primas v. Dist. of Columbia, 719 F.3d 

693, 699 (D.C. Cir. 2013) (“It is imperative that a district court articulate its 

reasons for electing to seal or not seal a record . . . [because here] the district 

court’s failure to explain it leaves us unable to review the . . . exercise of its 

discretion” (citations and internal quotation marks omitted)). 

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That failure to provide any reasoning for this Court to evaluate requires, at a 

minimum, vacating the Order and remanding for the bankruptcy court to explain 

the reasoned basis for its decision. See, e.g., Goodman, 960 F.2d at 149; Brown, 

710 F.2d at 1176; Primas, 719 F.3d at 699. Because discovery is rapidly coming 

to a close—including discovery into topics on which the City and others are 

claiming mediation privilege—and the confirmation hearing on the City’s 

proposed plan is scheduled to begin on September 2, 2014, Syncora respectfully 

requests that this Court order the bankruptcy court to unseal the Supplemental 

Order or provide a reasoned decision explaining why it refuses to do so within five 

days of any remand from this Court. Time here is of the essence. 

CONCLUSION 

For the foregoing reasons, this Court should reverse the bankruptcy court’s 

Order or, in the alternative, vacate and remand the Order with instructions that the 

bankruptcy court must either unseal the Supplemental Order or provide a reasoned 

decision explaining why it refuses to do so within five days of any remand from 

this Court. 

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August 15, 2014 /s/ Ryan Blaine Bennett

 James H.M. Sprayregen, P.C. 

 Ryan Blaine Bennett 

 Stephen C. Hackney 

 KIRKLAND & ELLIS LLP 

 300 North LaSalle 

 Chicago, IL 60654 

 Telephone: (312) 862-2000 

 Facsimile: (312) 862-2200 

- and - 

 Stephen M. Gross 

 David A. Agay 

 Joshua Gadharf 

 MCDONALD HOPKINS PLC 

 39533 Woodward Avenue 

 Bloomfield Hills, MI 48304 

 Telephone:(248) 646-5070 

 Facsimile: (248) 646-5075 

Counsel for Appellants 

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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF MICHIGAN 

In re: ) 

 ) Dist. Ct. No. 2:14−cv−13044 

CITY OF DETROIT, MICHIGAN, ) Hon. Bernard A. Friedman 

 ) U.S. District Judge 

 Debtor. ) 

 ) 

SYNCORA GUARANTEE INC. AND 

SYNCORA CAPITAL ASSURANCE INC., 

 

 

)

)

)

)

Bankr. Ct. No. 13-53846 

Hon. Steven W. Rhodes 

U.S. Bankruptcy Judge 

 Appellants, ) 

v. )

)

CITY OF DETROIT, MICHIGAN, 

 

)

)

)

 Appellee. ) 

CERTIFICATE OF SERVICE 

 I, Ryan Blaine Bennett, hereby certify that on August 15, 2014, I caused the 

foregoing Brief of Appellants Syncora Guarantee Inc. and Syncora Capital 

Assurance Inc. to be filed and served via the Court’s electronic case filing and 

noticing system to all parties registered to receive electronic notices in this matter. 

August 15, 2014 /s/ Ryan Blaine Bennett

 James H.M. Sprayregen, P.C. 

 Ryan Blaine Bennett 

 Stephen C. Hackney 

 KIRKLAND & ELLIS LLP 

 300 North LaSalle 

 Chicago, IL 60654 

 Telephone: (312) 862-2000 

 Facsimile: (312) 862-2200 

Counsel for Appellants

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