Judge Steven Rhodes still has July 24 scheduled as the day to begin confirmation hearings on the Detroit’s Plan of Adjustment — the document that explains how the city proposes to restructure its debt and operations post bankruptcy. But between now and then, there are plenty of outstanding issue he’ll address in court documents and hearings. Here are few that are pending:
First, creditors continue to pressure Judge Rhodes to delay the hearing. At a May 22 status conference, attorneys for several creditors urged the judge to postpone by a few weeks the July date. “There are many different creditor issues, any one of which, in my world as a complex litigator, could itself be a multi-year litigation,” said Stephen Hackney, a Chicago-based attorney for bond insurer Syncora. “I can’t come as a surprise to us that there are complicated issues to work through and complicated issues on discovery.”
To help along issues related to document production and witness lists, Judge Rhodes ordered attorneys for Detroit’s creditors to form a Committee on Discovery and Trial Efficiency, which they did. He has told the attorneys he hopes they can work out discovery-related issues themselves, but he will continue last week’s status conference on May 28 where he will continue to hear updates about the discovery process…and undoubtedly continued objections from attorneys to the timeline.
“I cannot adequately represent my client as the schedule is currently constructed,” said Guy Neal, an attorney with the Sidley Austin law firm from Washington D.C. who represents National Public Finance Guarantee, which insures about $1.8 billion worth of Detroit Water and Sewerage Department bonds. “We’re stuck on discovery but not even deposition discovery. We’re stuck on document discovery.”
Second, while it’s largely the city that’s pressing for the ambitious court schedule, Judge Rhodes’s appointed (and paid) expert witness has complained the city is preventing her from doing the necessary work to evaluate the feasibility of the city’s plan. An attorney for Martha Kopacz filed a letter with the court stating, in part, that the city’s accounting firm, Ernst & Young, was not providing her with complete financial information about the city. Kopacz wants the information on which the city is relying to make multi-year financial projections.
Judge Rhodes issued an order that he would consider Kopacz’s complaint at a May 28 hearing.
Third, the issue came up at last week’s hearing what would happen with the city’s contract with Jones Day law firm if the Chapter 9 case continued past September. That’s when the Detroit City Council could vote to remove Emergency Manager Kevyn Orr from office. Orr, of course, is a former partner with the Washington D.C. law firm, and the previous City Council voted to contract with the firm.
In court, the Jones Day attorneys said they weren’t sure what would happen if the bankruptcy case wasn’t settled by Orr’s exit date. “We have not had discussions to my knowledge going beyond that,” said Gregory Shumaker, a Jones Day attorney. “The mayor, the city council, it would be up to them whether Jones Day would continue its representation of the city.”
A day later the Detroit Free Press reported what Mayor Mike Duggan thought about that issue:
Mayor Mike Duggan’s office said Thursday he won’t support extending Kevyn Orr’s time as the city’s emergency manager or keeping on his former law firm, Jones Day, if Detroit’s bankruptcy extends beyond Orr’s expected exit date in late September. … Duggan made clear that if the bankruptcy proceedings extend beyond Sept. 25, he won’t support keeping Jones Day as the city’s law firm in bankruptcy. “We have no intention of keeping Jones Day,” Duggan’s spokeswoman and chief of staff, Alexis Wiley, told the Free Press. “We have every intention of running this city, and that means both services and finances.” Wiley declined to discuss how Duggan would handle the bankruptcy after ditching Jones Day, or which lawyers would pick up where the firm left off.
The Detroit bankruptcy story is far from ending.
Detroit Mayor Mike Duggan is celebrating state lawmakers passing a series of bills designed to help the city emerge from bankruptcy. Members of the state House approved nearly $200 million to help shore-up Detroit’s pension system – and prevent the sale of works from the Detroit Institute of Arts. But the funding, which must still be approved by the state Senate, comes with strings attached, including an oversight committee watching Detroit’s spending. WDET’s Quinn Klinefelter talked with Duggan about the measures.
The special House Committee on Detroit’s Recovery and Michigan’s Future is holding its fourth hearing today on the 11-bill package to provide funding and oversight for Detroit post-bankruptcy.
On today’s agenda: Detroit Mayor Mike Duggan, City Council President Brenda Jones, State Rep. David Nathan (D-Detroit) and Richard Ravitch, former lieutenant governor of New York and the bankruptcy court’s special expert witness in the Detroit case.
Watch it live here:
Our Detroit Journalism Cooperative partner Michigan Radio reports that the Detroit City Council has agreed to transfer more than 16,000 city owned properties to Detroit’s land bank authority, a move that allows Mayor Mike Duggan’s ambitious blight eradication efforts to move forward. Reporter Sarah Cwiek reports on how the mayor plans to use the non-profit land bank as a key tool in the fight against blight.
Attorneys for the city of Detroit filed a witness list this week in bankruptcy court. Among the 27 individuals named are Emergency Manager Kevyn Orr, Mayor Mike Duggan, Skillman Foundation President and CEO Tonya Allen, and Midtown Detroit Inc. President Susan Mosey.
From the Detroit Institute of Arts, the list includes Eugene Gargaro, chairman of the board, Graham Beal, director, president and CEO, and Annmarie Erickson, executive vice president and COO, and Board Member Marc Schwartz.
Other city officials named include John Hill, chief financial officer, Detroit Police Chief James Craig, and the fire commissioner. Several state employees are on the list including State Treasurer R. Kevin Clinton and Richard Posthumus, a senior advisor to Gov. Rick Snyder. The list also includes numerous financial, actuarial, accounting and restructuring consultants.
London’s The Guardian newspaper asks “Why does anyone still live in Detroit?” in an article published last week and authored by a native Detroiter now living in New York.
In the first five paragraphs, the article manages to pack in descriptions of the city’s problems with crime, police response, blight, population decline, lack of mass transit, crumbling roads and water infrastructure, lack of grocery stores and retail, and the difficulty of non-motorized transportation.
Whew. That’s an impressive litany of woes jammed into the top of an article, packaged between photos of a tagged abandoned house and a party store’s outside wall advertising liquor, lotto and check cashing.
In the remaining 2,100 words of the piece there is one paragraph devoted to Mayor Mike Duggan’s campaign promises, the city charter change to council elections by district and a description of how Emergency Manager Kevyn Orr has “made blight removal and service provision a priority.” One subsequent paragraph summarizes foundation dollars and other private contributions that could provide some support for improvements. Another few paragraphs describe the goals and challenges of the Detroit Future City plan.
The ‘Live in Osborn’ effort gets some rhetorical love in the article, with a description of improvements planned in that east side neighborhood. The blight removal efforts are as “the easiest answer, though not necessarily the best.”
But the article’s conclusion?
“Perhaps Detroit needs a hero to battle its hydra.”
Detroit Mayor Mike Duggan, Michigan Gov. Rick Snyder and Detroit Emergency Manager Kevyn Orr will be featured speakers at the Detroit Regional Chamber’s Mackinac Policy Conference later this spring.
Here’s what the chamber said in announcing the lineup:
With Detroit’s emergence from bankruptcy critically important to Michigan’s future, Orr will discuss the progress since his appointment in March 2013 and what is needed to position the city for success moving forward. Before his expected departure this fall, Orr will give insight into the short and long-term vision for Detroit’s sustained growth, as well as the blueprint it provides for municipalities around the nation facing similar challenges.
Other speakers in the scheduled May 27-30 event include:
Jim Clifton, chairman and CEO, Gallup Inc.; author, “The Coming Jobs War;” Malcolm Gladwell, author, “David and Goliath;” and Joel Klein, CEO, Educational Division, News Corporation; former chancellor, New York City Department of Education.