Pensions

  • Expert says Bond Markets Leery After Detroit Bankruptcy

    Detroit’s bankruptcy casts a long shadow over the Metro region.

  • Ford Foundation Returns to Hometown…at least for one meeting

    With $125 million in the “grand bargain,” the Ford Foundation has an investment in the city. Now, for the first time in decades, the group’s board of trustees will meet in the Motor City.

  • Pension cuts taking effect

    This week Detroit city retirees begin to see reductions in pension benefits — cuts enacted as part of Detroit’s exit from bankruptcy. Most retirees will see a 4.5 percent cut to their monthly pension payments. WDET’s Quinn Klinefelter has this report.

  • Judge: $178 million reasonable bankruptcy tab for Detroit

    Bankruptcy Judge Steven Rhodes today agreed that the nearly $178 million the city of Detroit paid its attorneys, financial analysts and other consultants was a reasonable charge. In a 48-page opinion released today, Rhodes wrote the city had met its requirement to show “all amounts to be paid by the debtor or by any person for services or expenses in the case or incident to the plan have been fully disclosed and are reasonable.”

    Among the fees charged:

    • Jones Day law firm, representing the city, $57.9 million
    • Miller Buckfire, an investment banking firm, $22.8 million
    • Ernst & Young, financial analysts, $20.2 million
    • Conway MacKenzie, restructuring experts, $17.3 million

    The city also paid about $26 million in expenses for the Official Committee of Retirees, which represented pensioners. The Committee’s law firm, Denton’s, billed $15.4 million.

    In his opinion, Rhodes noted the state of Michigan picked up about $5.3 million of the city’s total legal costs, making the total bill about $183.2 million. He also wrote that seven of the professional firms paid by the city filed briefs that supported the reasonableness of fees. Just one individual filed an objection to them.

    As he did when he approved the city’s Plan of Adjustment, Rhodes in his decision on the fees again praised the attorneys and other professionals, crediting their work in the case:

    It is perhaps too easy now to fast-forward through the play-back that is necessary to comprehend the magnitude of the accomplishments of the professionals in this case. But now is the time to appreciate and credit that accomplishment and all of the effort and skill of those professionals in achieving it. The City is now on a path to success precisely because of the expertise, skill, commitment, endurance, personal sacrifice, civility and proficiency of all of the professionals in the case, including most certainly those whose fees are subject to review in this opinion.

    2.12.15 Fees Decision

    By in Bankruptcy Court, Pensions, WDET
  • In the Michigan Citizen: Another view of post-bankruptcy Detroit

    “Detroit’s bankruptcy is unprecedented in many ways, and the state and federal power exercised in the process remains mostly untested,” writes the Michigan Citizen. “The media has chosen a comeback narrative for the city — news of investment, a burgeoning small business class, and younger, mostly white people, relocating to downtown and a few other neighborhoods.” Here’s another view.

  • The 9th Plan of Adjustment: a draft is filed

    To reflect its settlement with bond insurer Financial Guaranty Insurance Co., the city of Detroit filed an updated Plan of Adjustment today. It’s a draft, so it will be updated before the confirmation hearing ends next week.

    Here is the city’s 8th Amended DRAFT Plan of Adjutsment

  • From Lansing: New Detroit watchdog-ish group meets

    The authority that will oversee the disbursement of $195 million of state money to Detroit’s pension funds if the bankruptcy restructuring plan is approved is holding its first meeting at 9 a.m. Friday.

    We’ll have updates from the meeting. Meanwhile, here’s some background:

    The Michigan Settlement Administration Authority was created as part of the “Grand Bargain” legislation, specifically House Bill 5575. Rep. Fred Durhal Jr. (D-Detroit) was its sponsor. It exists to pay the $195 million to the city’s retirement systems when (if) Judge Steven Rhodes approves the city’s Plan of Adjustment to exit bankruptcy. The authority, according to the statute that created it, dissolves on May 2.

    Members of the Authority are State Treasurer Kevin Clinton, State Budget Director John Roberts and I. William Cohen, who was a senior partner at Pepper Hamilton, one of the law firms advising Detroit in the bankruptcy case, before he retired in 2009. Gov. Rick Snyder named Cohen to the Authority last month.

    9:45 a.m.

    We’re back in open session after the roughly 40-minute closed session. Members said they were discussing a “written memorandum of legal advice.”

    The authority adopted a motion to limit public comment to 5 minutes at future meetings.

    And we’re adjourned.

    9:42 a.m.

    Here’s the Michigan Open Meetings Act Handbook.

    These are the reasons a public body, such as the new Authority, may go into a closed session (as printed in the handbook) with comments on the likelihood today’s session relates to each reason.

    (1) To consider the dismissal, suspension, or disciplining of, or to hear complaints or  charges brought against, or to consider a periodic personnel evaluation of, a public officer, employee, staff member, or individual agent, if the named person requests a
    closed hearing.

    Note: As this is the first ever meeting of this Authority, this seems nearly impossible as the reason for this closed session.

    (2) For strategy and negotiation sessions connected with the negotiation of a collective  bargaining agreement if either negotiating party requests a closed hearing.

    Note: The statute creating the authority does not explicitly give it the power to negotiate contracts. Also, the city has reached collective bargaining agreements with its unions as part of the bankruptcy process. The latest was with police and fire unions. Earlier this year, a coalition representing about 3,500 other city workers agreed to terms.  

    (3) To consider the purchase or lease of real property up to the time an option to purchase or lease that real property is obtained.

    Note: This in no way relates to the authority’s mission.

    (4) To consult with its attorney regarding trial or settlement strategy in connection with specific pending litigation, but only if an open meeting would have a detrimental financial effect on the litigating or settlement position of the public body.

    Note: Ah, OK. As we’ve noted below, Steven Howell is in the closed session. He’s an attorney with the Dickinson Wright firm, but he’s been part of the bankruptcy trial, representing the state of Michigan. As the city’s trial — technically a confirmation hearing on the Plan of Adjustment — is ongoing, perhaps this is the reason. Although with the vast majority of creditors no longer objecting to the plan, it’s unclear how much state strategy is needed. On another note, pending litigation remains challenging the state’s emergency manager law, although some of it goes away per the terms of the Grand Bargain.

    (5) To review and consider the contents of an application for employment or appointment to a public office if the candidate requests that the application remain confidential. However, all interviews by a public body for employment or appointment to a public office shall be held in an open meeting pursuant to this act.

    Note: The authority has no employees.

    (6) To consider material exempt from discussion or disclosure by state or federal statute. But note – a board is not permitted to go into closed session to discuss an attorney’s oral opinion, as opposed to a written legal memorandum.

     

    9:23 a.m.

    One of the people still in the room is Steven Howell. He’s an attorney with the firm Dickinson Wright, representing the state of Michigan. He’s been involved in Detroit’s bankruptcy case, appearing during the ongoing trial.

    9:07 a.m.

    It took the new Authority about two minutes to go into a closed session (that means members of the public, including media) were kicked out. Staff from the state Attorney General’s office stayed in the room. The only thing the panel did before they “closed the door” was to appoint a secretary and discuss the process for posting meetings.

     

     

     

     

     

     

    By in From Lansing, Pensions, WDET