Detroit bankruptcy judge asks for final bills

Category: Bankruptcy Law Published: Wednesday, 24 December 2014 Written by Admin

Detroit -- The citys bankruptcy judge Monday ordered Detroits legal team and consultants to file final bills within the next week.

US Bankruptcy Judge Steven Rhodes issued the order during a hearing Monday and told city lawyers to disclose those fees and expenses before the end of the year. Rhodes did not, however, reveal any details on a deal announced last week that cuts those fees by about $25 million.

The deal will free up money for public safety and other services and give Detroit additional breathing room to implement a restructuring plan reached during the citys landmark bankruptcy case.

The law firms and consultants have agreed to trim about $25 million from the overall bill, which is north of $140 million.

The deal was reached during several days of closed-door negotiations after Mayor Mike Duggan expressed concern about escalating fees eating up money needed to revitalize the city and possibly derailing Detroits restructuring plan.

Some of the companies, a source familiar with the deal explained, cut fees, some gave back as in kind contributions and others agreed to not seek payment for future services from firms that Detroit will continue to use after the bankruptcy.

Before the deals were reached, federal mediators held at least four formal sessions over the reasonableness of more than $140 million in fees billed to Detroit by its bankruptcy lawyers and restructuring consultants. The team held talks with about a dozen firms, while the city held earlier talks with about a dozen smaller firms to reach settlements.

The citys lawyers and consultants pointed out during mediation they had already made significant concessions on fees.

By late October, the citys lead bankruptcy law firm, Jones Day, had charged Detroit $52.3 million.

City consulting firm Miller Buckfire renegotiated its contract with the city twice, most recently in June. In the newest contract, the firm was to receive a flat fee of $28 million for all of its services. Prior to revising its contract, the firm had already given the city a discounted rate, according to former Emergency Manager Kevyn Orrs office.

Orr, a former Jones Day attorney, told The News on Wednesday that the fees may seem high, but he said he didnt believe they were out of line for a case of Detroits magnitude.

The bankruptcy allowed the city to shed $7 billion in debt and to restructure another $3 billion, he said.

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