04.23.14

In some ways, the bankruptcy is like a jigsaw puzzle, where a thousand little pieces have to fall into place before the big picture can take shape. ~ Stephen Henderson, The Detroit Free Press

One More Lap.  U.S. Bankruptcy Judge Steven Rhodes yesterday appointed Martha Kopacz (please see court order below) to serve as: “The [U.S. Bankruptcy] Court’s expert witness [who] shall investigate and reach a conclusion on:

• (a) Whether the City’s plan is feasible as required by 11 U.S.C. § 943(b)(7); and
• (b) Whether the assumptions that underlie the City’s cash flow projections and forecasts regarding its revenues, expenses and plan payments are reasonable.

Judge Rhodes, who described the unprecedented appointment as temporary, made the $595/hour appointment of Martha Kopacz of Philadelphia-based Phoenix Management Services just four days after interviewing five candidates in his courtroom. She estimated her fees would cost “about seven figures.” In addition, Judge Rhodes asked Richard Ravitch, the former Lieutenant Governor of New York and Co-Chair with Paul Volcker of the State Budget Crisis Task Force to serve as a consultant on municipal finance issues and viability of the city’s debt-cutting plan. Mr. Ravitch will not ask for payment. The Judge has described the unique role as one to assist him in assessing the feasibility of Detroit’s proposed plan of adjustment, including reviewing the city’s financial assumptions and projections.

04.08.14

One More Lap.  The American Federation of State, County and Municipal Employees Council 25, Detroit’s largest union, in its objections to the Motor City’s plan of adjustment yesterday warned that Kevyn Orr’s plan to reduce pension payments to the city’s retirees would lead to significant increases in crime and poverty if accepted by the federal court. AFSCME’s comments, filed on the last day comments could be submitted, came even as Emergency Manager Kevyn Orr yesterday confirmed his legal team was still unfinished in its efforts to comply with U.S. Bankruptcy Judge Steven Rhodes’ order that Mr. Orr provide union members and retirees with a document that describes the city’s proposals as they would affect union members and retirees in “plain English.” AFSCME, in its submission, wrote that creditors, including city workers, could get a better deal if the Motor City reneged on tax breaks and land deals proposed to be provided to “the wealthy,” adding: “The city must disclose the risk that its financial projections do not properly take into account the added poverty rolls it may need to support, and further, the effect of such pension cuts on the morale of the AFSCME employees, the likely increase in crime and decaying social atmosphere, and all that comes with the proposed pension cuts.”