As the city of Detroit struggles through the largest public bankruptcy in the history of the United States, some of its creditors are publicly unhappy with the Federal Judge appointed as Mediator in the situation.  At issue are public comments that Judge Gerald Rosen, Chief Judge of the U.S.  District Court for the Eastern District of Michigan, made supporting the “swaps” settlement negotiated as part of the confidential mediation process between Detroit and UBS and Bank of America Merrill Lynch.

The banks, joined by Detroit's two pension funds, bond insurers Syncora and Financial Guaranty Insurance Company, and several European banks, criticized the judge’s comments on the basis that the mediation proceedings were supposed to be confidential.  Some have even suggested that the Judge could be censored, as the Mediation Order clearly prohibits breaking confidentiality.

The “swaps” deal concerns an agreement by the city to borrow $165 million in new debt to pay off $230 million of pension debt, “swapping” one debt for the other and saving $65 million in the process.  The deal only concerns UBS and Bank of America and the other creditors objected to the Judge’s endorsement of the deal because they have not agreed to it yet, and the public endorsement could be perceived as pressure to accept a similar deal.