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Fees, expenses for Detroit bankruptcy hit nearly US$178 million
[DETROIT] Detroit's historic bankruptcy, which officially ended earlier this month, cost the city nearly US$178 million in fees and expenses for teams of lawyers and consultants, according to a city court filing on Tuesday.
Jones Day, Detroit's lead law firm for the biggest-ever municipal bankruptcy which was filed by the city in July 2013, billed the most by far, at US$57.9 million.
The city, which exited bankruptcy on Dec 10 , paid a total of nearly US$165 million out of its general fund budget for professional fees for itself and for a court-appointed committee representing Detroit retirees, as well as for a fee examiner, court mediators and experts hired by US Bankruptcy Judge Steven Rhodes, the filing showed. That amount was US$12 million under the US$177 million Detroit had budgeted in its plan to adjust US$18 billion of debt and obligations.
The city also reported US$1.04 million in fees paid out of an enterprise fund and almost US$12 million in fees paid by its two pension funds.
Rhodes on Dec 15 ordered the city to file a final disclosure of fees and expenses by Tuesday, noting that he "will determine what further process is appropriate to determine the reasonableness of fees." Rhodes had sent the city and its bankruptcy team into mediation over the fees after Detroit officials raised concerns that burgeoning legal costs could eat in to money needed for city services. On Dec 11, court mediators announced fee deals subject to Rhodes' approval were reached, but did not disclose any details.