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Seeking expert help, Detroit bankruptcy judge interviews applicants
April 19, 2014 / 1:26 AM / 4 years ago

Seeking expert help, Detroit bankruptcy judge interviews applicants

DETROIT, April 18 (Reuters) - Applicants ranging from New York municipal finance expert Richard Ravitch to a local law professor bid to help Judge Steven Rhodes evaluate Detroit’s financial restructuring plan, but Rhodes ended the recruitment session on Friday without naming his choice.

Sitting in court without his customary judicial robe, Rhodes interviewed the four men and one woman, repeatedly reminding them that the expert’s role would be limited to advising on the feasibility of the city’s plans to exit bankruptcy.

“The expert witness will be my expert and is limited to an examination of the city’s plan and the reasonableness of assumptions that go into it,” Rhodes said.

Detroit, with $18 billion of debt and other obligations, filed the biggest municipal bankruptcy in U.S. history in July 2013 and in recent days has reached settlements with several major creditor groups.

Ravitch, who during the 1970s advised on New York City’s successful effort to avoid bankruptcy, bemoaned Detroit’s woeful financial circumstance. “Detroit’s problem is more severe because the problem wasn’t addressed earlier on when it would have been far less expensive to solve it,” he said.

Rhodes warned Ravitch, a former New York lieutenant governor, that the Detroit job would be far smaller than the task he carried out during New York city’s close brush with insolvency.

“History demonstrates the outstanding work you did for New York. This assignment is different in character - it is not to help the city to solve its problems,” Rhodes said.

Ravitch offered to work without pay, though he proposed just under a $1 million budget for work by his non-profit firm, the Ravitch Group. The most costly bid, from William Brandt Jr. of Development Specialists, a Chicago firm, came in at $1.6 million.

Other applicants for the job included Peter Hammer, a law professor at Wayne State University; Martha Kopacz, of Phoenix Management Services LLC in Boston; 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.

Rhodes’ questions varied little from person to person and touched on topics ranging from their qualifications, to their understanding of the problems facing Detroit to their views on the city’s plan to deal with its debt.

Hammer, the Wayne State professor, addressed issues such as the importance of race as Detroit seeks financial recovery. But Rhodes pointed out Hammer’s lack of municipal finance experience and noted Hammer has publicly criticized the state law under which Detroit’s emergency manager, Kevyn Orr, was appointed by Governor Rick Snyder, a Republican.

Brandt expressed optimism about Detroit’s restructuring plan . “I think this plan, if it works, offers Detroit a future,” said Brandt.

Rhodes is expected to make a decision regarding his expert witness not later than Monday. (Editing by David Greising and Mohammad Zargham)

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