Joel R. Glucksman
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Bankruptcy Fees Announced Paid By The City of Detroit
Author: Joel R. Glucksman
Date: January 15, 2015
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As the curtain opens slowly Detroit’s bankruptcy fees are revealed…
City officials disclosed Dec. 30 that Detroit paid out approximately $170.2 million in bankruptcy fees and expenses to lawyers and restructuring consultants during its landmark bankruptcy case.
When the state’s reimbursement of $5.29 million is considered, the total fees paid from the city’s general fund come to $164.91 million, The Detroit News continued. A deal was reached earlier this month regarding concessions from individual firms expected to shave off another $25 million from this figure, but specifics were not included in Tuesday’s filings per a mediation order.
Bankruptcy firm Jones Day earned the largest payout from the city to the tune of $57.9 million, according to the news source.
Investment banking firm Miller Buckfire followed with $22.82 million, financial restructuring advisory firm Ernst & Young took $20.22 million and operational restructuring firm Conway MacKenzie took $17.28 million. U.S. Bankruptcy Judge Steven Rhodes, who presided over the case, will rule as to whether these fees are reasonable within the next two weeks.
“We were very pleased with the mediation process and thankful to Judge (Gerald) Rosen and his team (of mediators) for their hard work throughout,” Detroit Corporation Counsel Melvin Butch Hollowell told the news source. “Now, we will look forward to Judge Rhodes’ ruling on the reasonableness of these fees.”
The final figure came in $12 million under the $177 million that Detroit had budgeted in its plan to restructure $18 billion of debts and obligations under Chapter 9 of the bankruptcy law, according to Reuters. The city also reported paying $1.4 million in fees out of the enterprise fund and just shy of $12 million paid by its two pension funds.
Rhodes sent Detroit’s bankruptcy team into mediation earlier in the proceedings after the city’s officials raised concerns about legal costs eating into the money needed to rebuild, according to the news source. Court mediators announced fee deals were reached on Dec. 11, but declined to disclose details.
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