After morning arguments on issues related to Detroit’s bankruptcy case, Judge Steven Rhodes delivered from the bench this afternoon a few decisions. He agreed to allow planning to move forward for bus tour of the city as part of the bankruptcy trial. But he refused bond insurer Syncora’s request to subpoena leaders of the 10 foundations originally involved in the “Grand Bargain” and the Michigan Attorney General Bill Schuette. Syncora attorneys wanted to ask Schuette about his opinion last year that preceded the bankruptcy filing in which he ruled that the Detroit Institute of Art’s collection was protected from sale by Michigan law.
Here’s a transcription of what Judge Rhodes said:
Addressing first the Attorney General’s motion to quash the subpoena that was issued to him by Syncora. The court concludes that this motion should be granted. The court concludes that the Attorney General’s opinion that is the subject of that subpoena is for all purposes the equivalent of a brief, and it will be given weight by the court only to the extent that the facts on which it relies are established in the evidence and the law on which it relies is persuasive. In weighing any settlement in the case including what’s been called the “grand bargain” here, the court will weigh the merits of the opinions, evidence, facts and law and not take into account the position of authority of the people who may have taken positions on side or the other of the issues. So in these circumstances, there is no basis for questioning the Attorney General about generating his legal opinion so that motion is granted.
Addressing next the foundation’s motion to quash the subpoenas that were issued to them, the court again concludes that this motion should be granted. The court concludes that none of the … subjects and none of the documents that are sought from the foundations are relevant to or even arguably relevant to the issues of whether the plan is discriminatory or whether it is unfairly discriminatory. … Accordingly, that motion is granted. Now having said that, it was mentioned during argument that Syncora is interested in information relating to the foundations’ ability to pay. That is a relevant subject on which the court would allow limited discovery. It is not however, as far as the court could determine, a part of the discovery that was in fact served. The court hopes that Syncora’s counsel and counsel for the several foundations can work out a streamlined and efficient way for Syncora to get the information it needs to evaluate this issue of their ability to pay. …
Turning now to the motion for a site visit, the court is inclined to exercise its discretion to grant that motion and to go on a site inspection as requested. The court believes it is likely that the value of such an inspection would be outweighed by the effort it would take to organize and execute the tour so it will take, however, further discussion and planning here in the meantime. So while I’m not prepared yet to enter an order granting the motion, I do think it is appropriate to move the discussions forward. And so to that end I am going to ask the creditors who are objecting to the plan at this point to nominate one or two of them to attend a meeting with one or two representatives of the city, me and the (U.S.) Marshall’s office to discuss and conclude the details necessary to effectuate this site inspection, and if the creditors are unable to agree upon one or two representatives for that purpose, the court will identify someone for you. I think that’s as much on that motion as we can do at this point in time.
The city’s petition for protective order of retirees’ personal information: The court did state on the record earlier that it would find that Syncora had withdrawn this request based on the court’s ruling that the retirees’ hardships was not at all relevant to the issue of either unfair discrimination or fair and equitable, and just to elaborate on that a bit, as the court stated earlier, it is unaware of any case law interpreting section 1129 that holds that it is appropriate to consider the relative hardships of creditors in evaluating the issues under that section of the bankruptcy code. And indeed as the court suggested in the hearing, if that door were opened here and that subject were relevant here, it would literally open up every single retiree as well as Syncora itself to these same inquiries about hardship, assets, income, financial position. And that would be an extraordinarily burdensome and invasive process for all concerned.
Turning finally to Syncora’s motion to compel complete and truthful answers to the interrogatories, the court is likewise going to deny this motion but with a finding on the record here that to the extent that any answer to any of the interrogatories as to which Syncora seeks a more complete answer is incomplete it’s because the city doesn’t know the answer.