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Detroit's six-month bankruptcy tab totals $36 mln-report
May 7, 2014 / 4:51 AM / in 3 years

Detroit's six-month bankruptcy tab totals $36 mln-report

May 6 (Reuters) - 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 through December.

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 municipal bankruptcy.

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 retired workers.

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 plan.

Rhodes, who must ultimately decide if that plan is feasible and fair, has scheduled a confirmation hearing that begins July 24. (Reporting By Karen Pierog; Editing by Matt Driskill)

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