Attorneys for the city of Detroit and some of its creditors will report back to Bankruptcy Judge Steven Rhodes later today about how they will deal with the city’s mistake in releasing dozens of documents that should have remained confidential.
Jones Day attorney Geoff Irwin, who represents the city, told Judge Rhodes this morning that the city “deeply regrets” the mistake.
“These were not intentional. They happened in conjunction with a very large document production,” he said.
In responding to a request for information from several creditors, the city released about 250,000 pages of documents. About 120 should have remained confidential because they were related to mediation efforts, according to attorneys in court today.
In a court filing Friday, bond insurers Assured Guaranty Municipal Corp., National Finance Guarantee Corp. and Ambac Assurance Corp. asked the judge to compel the city to do a full “clawback” of the documents that were released May 6, including having the city “certify” that whomever got the documents had destroyed them and would not use them or disclose their contents. Bond insurer attorneys made that request to the city by email last week but say that has not happened.
“The City’s document production thus directly violated this Court’s Mediation Order, which bars disclosure of such documents to parties other than those involved in the mediation,” Friday’s court filing reads. A court order from last year required that all written material related to mediation should remain confidential.
The three bond insurers reached an agreement with the city last month over unlimited tax general obligation bonds that reduced a $388 million debt to about $288 million, a 74 percent payout. At the time, the city’s bankruptcy-exit plans called for a 15 percent payout to such creditors.
Judge Rhodes, who is considering several procedural items today in an ongoing hearing, told attorneys to talk over lunch about how to handle getting the documents returned.
“In the court’s view this is a major problem that needs to be solved today,” Rhodes said.
UPDATE: The parties who received documents they shouldn’t have because of a city error will return any electronic or paper copies of them, Judge Rhodes ruled this afternoon. “Everyone who is doing the purging and returning will file a certification with the court that they have done so,” said Robert Schwinger, attorney for Assured.
There was no agreement about who should pay for attorney costs related to the error. Judge Rhodes said motions could be filed to address such costs.
-By WDET’s Sandra Svoboda
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