06.18.14

Squash! Michigan Attorney General Bill Schuette yesterday approved the key provisions of the grand bargain, or $661 million plan to enhance public pensions and protect the Detroit Institute of Arts collection from creditors, and requested that U.S. Bankruptcy Judge Steven Rhodes quash a subpoena from holdout creditor Syncora Guarantee Inc. – which is seeking to question the Attorney General under oath about his opinion as part of its fight to sell pieces of the DIA collection for creditors’ benefit. The Attorney General’s opinion determined that the Detroit Institute of Art collection cannot be sold because it is held in a charitable trust.) In his request, Mr. Scheutte wrote that such a subpoena would subject him to an undue burden and possibly reveal privileged material. Judge Rhodes said he would consider the request next week.

No to Busing. Motor City Creditors Assured Guaranty, Berkshire Hathaway Assurance, and FGIC yesterday filed an objection in federal court to the Motor City’s proposal to give U.S. Bankruptcy Judge Steven Rhodes a bus tour of Detroit’s neighborhood—similar to the rides provided at the Michigan Municipal League’s annual meeting in Detroit last year for the League’s elected and appointed leaders.  The objecting creditors wrote that such a tour would be irrelevant to the plan of adjustment confirmation hearing, potentially misleading. and legally improper: “What the City proposes is having the Court view one party’s cherry-picked selection of a mere handful of locations, with those locations being of no more inherent relevance to this case than thousands of potential alternative locations within Detroit that could just as easily have been selected for viewing….No ‘site visit’ could possibly encompass even a meaningful fraction of what this case is about or the people, places, businesses, and institutions that this case will affect in any reasonably evenhanded or fair manner,” adding: “The risk that details of the bus tour could leak in advance, or be discovered by the media while the tour is in progress — or indeed could be revealed through live reporting on social media — creates not only security risks but also the possibility that interested persons or groups could seek to alter conditions or stage incidents or confrontations at the proposed viewing locations.” The bond insurers protested the city’s proposal to allow its own attorneys to lead the three-hour tour and answer the judge’s questions throughout the process. They said the city’s proposal to provide a video of the tour to creditors was not sufficient and could lead to “selective editing” possibilities that “boggle the mind.”

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