• 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
  • Judge Rhodes to Walsh graduates: Seen in Word Cloud

    We wanted to see what Detroit Bankruptcy Judge Steven Rhodes’s commencement speech at Walsh College on Saturday looked like in a Word Cloud — a snappy feature to see what words are most prominent in a text.

    The full text and audio is here.

    Here it is:



    By in WDET
  • Judge Rhodes to Graduates: Lessons learned from the Detroit bankruptcy case

    IMG_2556Judge Steven Rhodes used his 18-minute speech at Walsh College’s commencement to offer graduates a few lessons from history’s biggest municipal bankruptcy case in Detroit. Numbering them one through five, Rhodes translated from the 17-month case five lessons learned, and he explained to the crowd at the Zion Christian Church in Troy how they applied to their post-graduation lives.

    Among Rhodes’s advice from the case: Ask for the help that’s out there. Do not be in denial of problems, and get help when you need it. Use teamwork to get the help you need. To get help, give help.

    Here is the full audio of his address. The full text of his speech appears below.

    Here’s what he said about some hallmarks of the case:

    On why bankruptcy happened

    “…the city of Detroit got into trouble because people ran the city. People who were not perfect. People who made mistakes. People who took unnecessary risks with the assets and the responsibilities that were entrusted to them.”

    On what bankruptcy isIMG_2559

    “…people a second chance, a fresh start, to forgive them. That’s of course what bankruptcy is all about. It’s a chance for people who have fallen on hard time or made bad choices to start over. “

    On how Detroit’s situation got so bad

    “…. It’s simply called “denial.” People who need help deny needing help, and they deny it for too long.”

    On the $1.8 billion pension financing deal in 2005

    “…that was a bad deal because it involved a financial gamble that the city would never be able to pay off and it was a bad deal because it only delayed the inevitable. If you can’t pay your debts, it doesn’t help just to substitute a new creditor for your old creditor. Worse yet, that deal almost certainly violated state law by evading the city’s legal debt limit and worst of all, the consequence of that deal made the process of resolving Detroit’s problems eight years later when it did file bankruptcy much more challenging and much more expensive. “

    On teamwork involved in the case

    “…there was teamwork between the city’s professionals in the bankruptcy case and its elected officials and employees. As a direct result of that teamwork, we have a much more feasible, effective and efficient plan to revitalize the city with full buy-in. And so it was that that little teamwork among me and my colleagues led to an important level of teamwork in creating a viable plan for the city of Detroit. Now teamwork does not necessarily mean that everyone agrees on everything all the time. No. In the Detroit case there was serious litigation over big and little issues from the beginning to the end: whether to sell the art at the DIA to pay creditors was probably the biggest issues. But even that litigation was conducted by the professionals in a cooperative, professional way.”

    On why creditors agreed to settle

    “…Certainly there was a measure of self interest in each of their settlement decisions. Let’s not doubt that. But there was much more to it than that. Much more. A big reason all of this happened is because the mission of the city of Detroit is to help people.”

    IMG_2565In summary

    “Lesson No. 1 from the Detroit case: We Americas love to give help. Lesson No. 2: Ask for the help that’s out there. Lesson No. 3. Denial is a river in Egypt. Come on, Denial is a river in Egypt. (The audience says it with him.) Get help when you need it. Lesson No. 4: Use teamwork to get the help you need. Lesson No. 5: To get help, give help. It’s who we are. May you get the help that you need to run a straight course up the mountaintop of success in business and may the help that you need never require a trip to my bankruptcy court.”



    Detroit Bankruptcy Judge Steven Rhodes at Walsh College Commencement

    By in Bankruptcy Court, Feature, WDET
  • State of the State: What Snyder said about Detroit

    It took him little way into his 2015 State of the State speech, but Gov. Rick Snyder gave Detroit, its bankruptcy and its emergence from it a few minutes during the annual address last night.

    Here’s audio of the whole speech:

    Here’s what he said about Detroit:

    (Begins at 16:11 into the speech) In terms of local government, one thing I have to mention in terms of opportunity and great outcomes, is the city of Detroit. We emerged from bankruptcy from the city of Detroit, a tremendously hard, difficult process that many people came together to do special things that stand out. And I do want to recognize the people that really made that happen, I want to recognize the retirees who made a sacrifice, who went through very difficult times and they were with us though to support the grand bargain. I want to recognize the hard work of the people at the DIA in terms of raising resources, the foundation committee for raising resources, all the great work that took place through this process to make Detroit a stronger, better place. In particular, I want to thank Mayor Duggan. Mayor, thank you and the city council for your strong effort. (APPLAUSE) 

    A gentleman, a fellow U of M alumni who did tremendous work, we want to get him back in the state of Michigan Kevyn Orr. (APPLAUSE) and some of the individuals couldn’t join us, but Judge Rosen and Judge Rhodes did tremendous work in this effort, and I want to thank each and every legislator, for your conference, your courage to come together to stand up as Michiganders to say we are all one state. We’re strongest when we recognize it’s Detroit, Michigan, and the thing I’m proudest to say, after how many decades can each one of us say now that we all have the common goal of not dwelling on Detroit’s past, but saying let’s grow the city of Detroit, in particular put an emphasis on the neighborhoods to bring them back to be a great place to live in our state. Let’s see Detroit keep continue going up and Mayor you have my support and partnership in helping make that happen. Thank you (EXTENDED APPLAUSE to 18:32)


    Then at 40:30: To give you an update on something though is of interest to many people on the whole situation of emergency managers, since I’ve been governor we’ve had 11 different cities or school districts that have had an EM. I’m pleased to report six of them have left emergency manager status and we have a seventh on the way. The system is generally working well, but the point is let’s avoid emergency managers, let’s do early warning, and the other thing I’m calling for is we need to do a scorecard for all local jurisdictions and state jurisdictions about financial performance and performance in terms of objectives that’s easier for our citizens to use and to see. Let’s create this easy-to-use scorecard that our citizens deserve so we can be more accountable and transparent on how we’re operating and what our challenges are within government.

  • The Water Deal: Macomb exec raises questions

    A much heralded piece of regionalism during Detroit’s bankruptcy case, the Great Lakes Water Authority was part of the city’s exit from Chapter 9. Now, Macomb County Executive Mark Hackel says some of the numbers involving the authority are not adding up. He explains his concerns to WDET’s Quinn Klinefelter.

  • The Year(end) in Bankruptcy

    Detroit had an historical year in 2014, to say the least and to say it again.

    The city’s bankruptcy – history’s largest municipal case, as we’ve said, written and blogged countless times — monopolized local news, and 2014 brought Detroit and the bankruptcy to the forefront of all local and some national news outlets. Former Emergency Manager Kevyn Orr and Bankruptcy Judge Steven Rhodes captured headlines, and the “grand bargain” became a household phrase.

    Here is a look at some of the year-end news recaps as well as into what 2015 might hold for Detroit:

    The city’s past and the future were discussed on 2014’s final Flash Point with optimism reigning supreme. Former City Council Shelia Cockrel, however, “cautions city officials that hard work is on the horizon as the return from bankruptcy continues.”

    The WDIV program’s guests included  Portia Roberson, the city’s group executive for civil rights and ethics, Cockrel, political consultant  Adolph Mongo and The Detroit News’s Nolan Finley. The picture painted of the future is bright but not without bumps in the road.

    Roberson predicts 2015 will “undoubtedly be a better year for the city of Detroit, thanks to the emergence from bankruptcy and resulting financial flexibility.” But Cockrel cautions city officials that there is plenty of work left. Mongo suggested ways the city can avoid past mistakes, Finley recommend focusing on raising revenues.

    The Detroit Free Press provided comprehensive coverage throughout 2014 about the bankruptcy. Through their extensive reporting, Freep reporters composed a bit “manifesto” chronicling Detroit, the bankruptcy and how it got there. “And, ultimately, it’s the story of how, one by one, like soldiers switching sides in the midst of battle, the major players and creditors who had been at war with the city dropped their objections and joined a “grand bargain” to save Detroit.” It was published in November, but we think it’s worthy of a re-post at year’s end.

    Crain’s Detroit Business named Orr and Rhodes Newsmakers of the Year for 2014. Their work doing what many believe to be impossible earned them this titled.

    USA Today, in a year-end wrap up of the single biggest news stories in all 50 states, named the bankruptcy as Michigan’s. “The nightmare is over,” they wrote.

    Still, the bankruptcy didn’t solve all of the city’s problems. An Agence France-Presse piece, published in Business Insider, outlines the great progress the city has had but also makes note of problems that still lie ahead.

    The venerable New York Times also points out that many questions remain to be answered as the city moves forward.

    For the local take on what remains, here are the Freep’s answers to those questions.

  • Beyond Bankruptcy: WDET explores life in Detroit in the post-Chapter 9 era

    Following the bankruptcy trial, WDET headed into Detroit’s neighborhoods with panels of city officials and neighborhood advocates. We met with residents, heard their questions, asked our own and got some answers. Here are those meetings, recorded, as they aired on WDET’s Detroit Today program. Topics: City services, public safety, blight, lighting and (inclusive) development.


  • For Detroit, it’s time for the post-bankruptcy chapter

    Effective at midnight tonight, Detroit is no longer in bankruptcy…and Kevyn Orr is no longer the emergency manager.

    Here’s the last order he issued in his position.

    Orr, Gov. Rick Snyder and Detroit Mayor Mike Duggan met with reporters this morning. They made statements, thanked numerous parties and looked ahead to Detroit’s next chapter.

    Here’s some of what they said:

    From Orr:

    “We are thankful that at this point the city will emerge later today, by the time I go to bed, from bankruptcy. We will exit and we look forward, truly to a better time for the city going forward.”

    “The reality is that the city is moving forward and that gives me a great deal of pride and satisfaction.”

    From Snyder:

    “How can we make sure the neighborhoods are coming back, jobs are being created?”

    “If you look at the timeframe, over the last year or so, we’ve seen a major improvement in city services which was long overdue.” 

    “I want to recognize the retirees who are taking some cuts through this. That shouldn’t be forgotten.”

    “We’re showing in this world, compared to the old world, where you used to hear about deficits, new problem and new issues. Now we’re showing how we can work together, show better results, and I’m really excited about partnering, again with the mayor and city council and only watching that path get better and better.”

    “We’re all focused on growing the city of Detroit, a tremendously exciting outcome. … We’ve got an outstanding outcome, far better than people’s expectations.”

    From Duggan:

    “The Plan of Adjustment gives us the tools to have a chance to succeed.”

    Some of the city’s consultants, hired before the bankruptcy was filed, will continue with the city specifically for financial matters.

    “All the drama has been on the bankruptcy side. It hasn’t been with the city officials. … People of the city have seen the improvements.”

    “We’re going to start fresh tomorrow, and we’re going to do the best we can to deliver the services people of the city deserve. … Tomorrow’s not different than any other day.”

    “Kevyn Orr. Former Emergency Manager. That has a nice ring to it.”