May 6 The first six months of Detroit's historic
bankruptcy case cost the cash-strapped city $36 million in fees
and expenses for a team of lawyers and consultants, according to
a quarterly report filed late Tuesday by a federal
court-appointed fee examiner.
About $22 million of that amount represented the tab for
professional services in the latest quarter covering October
Costs will likely mushroom for the next reporting period of
January through March, which included the city's filing and
subsequent revision of a plan to adjust $18 billion of debt and
exit the biggest municipal bankruptcy in U.S. history that was
filed on July 18.
In an interview with Reuters last month, Kevyn Orr, the
city's state-appointed emergency manager, said he hoped the
bankruptcy's final price tag will not reach the hundreds of
millions of dollars.
Jefferson County, Alabama, which was the largest municipal
bankruptcy before Detroit, spent only about $25 million on its
two-year stay in court protection, according to court records.
Robert Fishman, the fee examiner in Detroit's case, said in
his report that expenses were "substantial" during the latest
three-month reporting period, which included a trial that
ultimately determined in December that Detroit was eligible for
Ongoing court-ordered mediation between Detroit and key
creditors and hearings over a proposed settlement of costly
interest-rate swap deals also added to costs.
"Although the fees incurred by the professionals during the
reporting period and covered by this second quarterly report are
substantial by any measure, the fee examiner believes that all
of the requested fees are commensurate with the complexity and
speed of the case and the quality of the services that the
professionals have provided," Fishman said in his report.
Fishman filed his first quarterly report, covering July 18
through the end of September, on Feb. 4.
The biggest bill has come from Jones Day, Orr's former law
firm, which is spearheading Detroit's case. The firm has billed
$16.61 million in fees and $733,522 in expenses since July,
according to the examiner's report.
The $36 million in costs through the end of December
includes $6.58 million in fees and expenses that Detroit must
cover for a court-appointed committee representing the city's
Judge Steven Rhodes, who is overseeing Detroit's bankruptcy,
approved on Monday a disclosure statement the city will send to
its thousands of creditors who will vote on the debt adjustment
Rhodes, who must ultimately decide if that plan is feasible
and fair, has scheduled a confirmation hearing that begins July
(Reporting By Karen Pierog; Editing by Matt Driskill)