Racing to the Appeals. The Motor City’s two pension funds have filed a request with the U.S. 6th U.S. Circuit Court of Appeals, seeking an expedited appeal of U.S. Bankruptcy Judge Steven Rhodes’ December 3rd ruling that Detroit is eligible for Chapter 9 and that its pensions can be cut, saying the case has national implications that warrant a speedy review, noting: “If any bankruptcy case ever warranted an immediate, direct appeal, it is this case…The bankruptcy court’s eligibility decision involves nationally significant, unresolved legal questions that will determine the fate of the largest municipal bankruptcy in American history, and may set the template for future Chapter 9 cases.” Continue reading


T’was the Day before Christmas…After two days of intense negotiations led by Chief Mediator U.S. Chief District Court Judge Gerald Rosen, the city of Detroit and its swap counterparties—two banks, UBS and Bank of America, on Christmas Eve reached an agreement which will be subject to approval by U.S. Bankruptcy Judge Steven Rhodes, who has set a hearing on the agreement for a week from tomorrow at 9 a.m. Continue reading


T’was the Day before Christmas…Chief U.S. District Judge Gerald Rosen, who is coordinating an unprecedented quintet of federal judges appointed to help mediate between the Motor City’s creditors, last week warned the city and others failure to attend today’s Christmas Eve session “shall be grounds for the imposition of immediate sanctions, including entry of a default judgment.” Continue reading


Unappealing.  U.S. Bankruptcy Judge Steven Rhodes late Friday afternoon filed a memorandum with the U.S. 6th Circuit Court of Appeals recommending that the circuit court reject direct appeals of his decision finding the City of Detroit eligible for municipal bankruptcy and that the city’s pensions could be impaired as part of the city’s Plan of Adjustment. Continue reading


Swapping. The Motor City could run out of cash as early as the end of this month if the U.S. bankruptcy court does not permit it to terminate interest-rate swaps and free up casino revenue, a city consultant testified before U.S. Bankruptcy Judge Steven Rhodes yesterday on the first day of hearings that could last through tomorrow devoted to the city’s proposed settlement with its interest-rate swap counterparts and related $350 million debtor-in-possession financing with Barclays. Continue reading


Doubling Up on Appeals. U.S. Bankruptcy Judge Steven Rhodes, just three days after U.S. District Court Judge Dolly Gee (City of San Bernardino, Ca. v. California Public Employees Retirement System (CALPERS), #5:2013cv01952, yesterday allowed appeals of the two key provisions of his Detroit decision — finding Detroit eligible for bankruptcy and its pension systems subject to cuts to retirees — to proceed to the U.S. 6th Circuit Court of Appeals. Continue reading


Governance in Municipal Bankruptcy. The process of exiting municipal bankruptcy has to be one of the most extraordinary challenges there can be: it involves a federal judge, legal authority defined by state law, a receiver or emergency manager, elected officials of the city or county in question, conflicts between all three levels of government, and—as we have noted in Detroit, the conflicting claims of 100,000 creditors—each of whom expects to be made whole. Continue reading