The federal judge overseeing Detroit's historic bankruptcy case tapped a top restructuring official at Phoenix Management Services on Tuesday to help the court determine if the city's plan to adjust its $18 billion of debt is feasible.
U.S. Bankruptcy Judge Steven Rhodes also named Richard Ravitch as a consultant to the court on municipal finance matters. Ravitch, who advised New York City during its fiscal crisis in the 1970s and who had served as a New York State lieutenant governor, agreed to consult for free and will not be required to testify in the case, according to the judge's order.
Martha Kopacz, a senior managing director at Phoenix Management Services in Boston, beat out four other applicants, including Ravitch, for the position of expert witness.
In his appointment order, Rhodes said Kopacz will also determine whether Detroit's assumptions regarding cash-flow projections and forecasts of revenue, expenses and plan payments are reasonable.
Kopacz has a June 24 deadline to submit her report to the judge and will be available for depositions and to testify in the city's bankruptcy case, according to the order.
Rhodes on Monday moved the date for the confirmation hearing on the plan to July 24 from a previously scheduled July 16.
Detroit filed the biggest municipal bankruptcy in U.S. history in July 2013 and in recent days has reached settlements with several major creditor groups. U.S. Judge Gerald Rosen, the chief mediator in the case, on Monday ordered the city and certain bondholders and bond insurance companies into mediation sessions over Detroit's limited tax general obligation bonds as well as water and sewer department matters.
The city faces a Friday deadline to send the court another revision of a key supporting document for its plan ahead of a Monday hearing.
The so-called disclosure statement lays out a history of Detroit's fiscal woes and details how creditors, including city retirees and bondholders, would fare under the debt adjustment plan.
Kopacz has more than 30 years of experience in consulting and restructuring for companies, nonprofit groups, public sector entities and others, according to her resume. She served as an adviser to the Nassau County Interim Finance Authority, a New York State oversight board created in the wake of the county's financial difficulties.
Other expert witness applicants interviewed by Rhodes last Friday included William Brandt Jr. of Development Specialists in Chicago; Peter Hammer, a law professor at Wayne State University; and Dean Kaplan, managing director of PFM Group of Philadelphia, which has advised on financial restructuring in Philadelphia and Pittsburgh and also worked with the Detroit Public Schools.
(Reporting By Karen Pierog; editing by Gunna Dickson)