Creditors Seek Delay on the Final Laps.
The Motor City’s Timetable:
- Creditors will have a deadline of April 1st to file objections to the city’s plan of adjustment—and that date will mark the date upon which depositions on objections may begin—with the Judge determining the challenges would bisected into legal and factual objections—with a separate trial for each category.
- Judge Rhodes set a deadline of April 4th for the Motor City to respond to all objections,
- April 14th for both a status hearing and to entertain objections to the disclosure statement, and
- April 28th to hear legal objections to the plan of adjustment (which could include a battle over whether Detroit can legally be forced to sell Detroit Institute of Arts property).
- June 11 for a final pre-trial conference for June 11th;
- June 16 for a trial date on the factual objections to the city’s plan, and
- Then set aside nine additional days throughout June for the trial if necessary.
Whoa! Slow Down! Two sets of the Motor City’s 100,000+ creditors on Friday submitted requests to the U.S. Bankruptcy Court to slow down the schedule (see above) Judge Steven Rhodes set. Judge Rhodes had already, last week, rejected a similar request from creditors who asked for more time to assess the city’s disclosure statement, making clear Detroit could ill afford further delays in the face of apprehension the city could run out of money to finance the costly case while continuing not just to operate, but to actually continue efforts to rebuild towards a sustainable future. But a significant set of creditors, including the city’s two pension funds, public safety unions, and other bond insurers, suggested delaying the trial date from June to July 14 (please see their proposed schedule presented to the court bellow), telling the court: “The commenting parties appreciate the court’s desire to promote the just, speedy and inexpensive determination of this case,” but calling Judge Rhodes’ proposed schedule “unrealistically compressed, and [that it] contains some structural and sequencing issues that should be reconsidered.” The city itself recommended a one week delay on the trial date to June 23rd. Retirees and pension funds argued the proposed cuts were too deep, while bond insurers complained that bondholders were being treated unfairly. Some of the creditors contended the schedule did not allow enough time to fully vet the plan, which they said was incomplete.
Proposed Revised & Delayed Schedule
May 27, 2014 is the deadline for the City to file one combined response to all of the timely objections to the plan, and to file a brief in support of plan confirmation.
May 2, 2014 at 11:00 a.m. shall be the date and time of the initial status conference on plan confirmation. Among other things, such status conference shall address deadlines for disclosure of exhibits and rebuttal witnesses.
June 16, 2014 is the deadline:
a) To complete non-expert depositions; and
(b) For objectors to submit expert reports.
June 30, 2014 is the deadline:
a) For plan voting; and
(b) To complete expert depositions.
July 8, 2014 at 4:00 p.m. is the deadline:
a) To submit a proposed joint final pretrial order in compliance with LBR 7016-1; and
(b) To file pretrial briefs and any supplements to plan objections.
July 9, 2014 at 11:00 a.m. shall be the date and time of the final pretrial conference on plan confirmation.
July 14, 2014 at 9:00 a.m. shall be the date and time for the commencement of the trial on plan confirmation. At this hearing, in addition to any evidence addressing the factual issues raised in the parties’ plan objections, the City shall present evidence establishing the feasibility of its plan as required by 11 U.S.C. §943(b)(7). Additional hearing dates, as necessary, will be July ___, 2014. The dates and deadlines established herein will be extended only on motion establishing good cause.
It is so ordered
Unsynchronized Syncora. Syncora Guarantee Inc. which guaranteed payments on some of the Motor City’s municipal bonds, submitted a separate brief proposing a significantly longer delay of the trial to September 8th, and recommended the Motor City should pursue a privatization of its water and sewer department with private investors as an alternative to the so far unproductive negotiations with its suburban neighbors. In its brief, Syncora wrote: “As the largest Chapter 9 filing in history, this case involves a number of complex and unprecedented issues―many of which are central to creditor recoveries and the plan confirmation process…Despite the significance of these issues, the current accelerated schedule requires that they all be resolved in a few months. Syncora therefore proposes that the court adopt a more deliberate schedule that permits a thorough and meaningful consideration of the following issues.” Syncora also noted that, in addition to the unresolved state of Detroit’s water and sewer negotiations, there is still no resolution of the value of the Detroit Institute of Arts collection; the size of Detroit’s pension liabilities, or the assessment of the city’s 10-year capital rebuilding plan. In its brief, Syncora noted that lawsuits will be filed over the Detroit Institute of Arts’ collection, which the city is not selling at this point to help pay its $18 billion in debt, warning that: “Given the city’s odd decision to value just 5 percent of the entire collection and its repeated failure to provide ownership information, there will be litigation surrounding the art and it will be time consuming.”
Disbanding. In an unrelated action on Friday, Judge Rhodes granted the City of Detroit’s motion to disband a committee of unsecured creditors, citing the committee’s unwillingness to participate in mediation and the millions of dollars in professional fees continuing operation of the committee would mean to the city. The committee, created in December by the U.S. Trustee, includes bond insurer Financial Guaranty Insurance Co and the city’s two pension systems, which are its biggest unsecured creditors. At a February 19 hearing, Detroit’s attorneys had argued the committee was unnecessary, because all of Detroit’s major unsecured creditors have already participated in the case, including mediation, and have legal representation. A separate committee formed at the city’s request earlier in the bankruptcy case to represent retired city workers cost Detroit nearly $2 million in fees and $61,500 in expenses between July and September, according to a report released this month by a court-appointed fee examiner.