Syncora, the bond issuer that has a stake worth hundreds of millions of dollars in Detroit’s ongoing bankruptcy saga has insisted that an arbitration ruling that exhibited “naked favoritism” for the city’s pension program and the Detroit Institute of Arts over its creditors must be tossed out by presiding Judge Steven Rhodes.

Naming lead mediators Gerald Rosen and Eugene Driker specifically, the bond issuer’s relationship with Detroit has become so toxic that the judge recently ordered the city to cease using “war metaphors” when discussing Syncora.

The mediated “grand bargain” allows Detroit to lower pension cutbacks and transfers the Detroit Institute of Arts to a charitable trust, saving it from being dissolved to pay off debt.  The mediation also solicited donations from nonprofit foundations, bringing in $366 million, and the Institute will contribute $100 million over the next 20 years as well.  The State of Michigan then agreed to add $195 million in cash.

The bargain, yet to be approved by Rhodes, was attacked by Syncora as the result of collusion between mediators and “certain creditors” who are receiving preferential treatment.  The bond issuer cited several statements made publicly by the mediators in which they expressed concern for pension holders who are at risk of losing pension payments they worked hard for.  Syncora also pointed out that Driker’s wife was a former member of the DIA’s board of directors.

Rhodes has the authority to vacate the mediation bargain, but it is not thought to be likely.