Bankruptcy judge sticks to 'aggressive timetable' for Detroit case



If you tuned in  to WDET's Craig Fahle show Monday morning, you likely heard Laura Bartell, professor of law Wayne State University, talk Detroit's bankruptcy case. During the interview, she said it was highly unlikely that U.S. Bankruptcy Judge Steven Rhodes would schedule confirmation hearings anytime soon on the proposed bankruptcy-exit plan, called a  "Plan of Adjustment," filed by Detroit Emergency Manager Kevyn Orr last Friday.

It likely came as a surprise to her, then, to see Rhodes issue a schedule of confirmation hearings just a few hours after the interview. Retirees and other creditor groups appeared to be taken aback by the expedited timetable, especially considering a slew of exhibits were left out of the 120-page plan of adjustment and 440-page disclosure statement. Attorneys representing the retiree and creditor groups asked Rhodes yesterday to slow the pace, but the judge didn't budge, citing Detroit's lack of cash.

“The problem with delay is the city will not have any more money to pay you if this is put off two or four or six months,” U.S. Bankruptcy Judge Steven Rhodes told attorney Carole Neville, who represents Detroit retirees. “(Detroit) is not a retail operation with a Christmas season coming.”

One of the issues with the proposed bankruptcy-exit plan, as pointed out by a group of community groups this week, is the majority of it is based off "if-come" -- a pointed reference to the "grand bargain" proposal, roughly $850 million in pledged support to shore up Detroit's pensions. In particular, a pledge of $350 million from the state legislature -- as proposed by Gov. Rick Snyder -- is needed in order for Orr's plan to move forward without substantial changes.

Without the state's support, the proposed cuts to pensions -- up to 34 percent for general retirees, 10 percent for police and fire employees -- could balloon. Also, of note: the same day the Plan of Adjustment was filed, the U.S. 6th Circuit Court of Appeals agreed to hear an appeal on Detroit's eligibility for bankruptcy. Orr has said the city wouldn't pursue a final bankruptcy-exit plan with appeals hanging in limbo.

So, we asked Bartell her thoughts on the fast timetable proposed by Rhodes. In an email, she said:

I was very surprised.  As everyone has said, it is an aggressive timetable.  Personally, I don’t see how it can be achieved, but perhaps all the parties will suddenly fall into line and support the proposed plan.  If they do not, the plan will not be confirmed, whatever schedule Judge Rhodes has established.

Our own Jack Lessenberry wrote about the proposed Plan of Adjustment and its potential impact to pensioners in this week's Metro Times.



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