Bankruptcy Judge Steven Rhodes indicated yesterday that the current timetable for finishing Detroit’s case might be unrealistic given the many disputes outstanding, raising questions about whether Detroit can exit bankruptcy before the end of its emergency manager’s term, the New York Times reported today. Judge Rhodes made the observation in a hearing after saying that he had heard that the state had promised to give Detroit some money — but only if the city could get him to approve its bankruptcy exit plan by the end of September. He said that state lawmakers needed to understand he could not guarantee meeting that deadline. Judge Rhodes concern stems over the large stack of objections to Detroit’s bankruptcy plan that piled up in the courthouse this week in response to a deadline. For months, a team of mediators has been trying to negotiate out-of-court settlements to Detroit’s many obligations, and until recently it seemed to be having remarkable success, particularly with the so-called grand bargain, which proposed to use the city’s famous art collection to raise $816 million for retirees’ pensions.
http://dealbook.nytimes.com/2014/05/15/detroit-bankruptcy-deadline-may-…
In related news, a bond insurer wants the chance to fight Detroit’s effort to cancel $1.4 billion in pension debt, Bloomberg News reported today. The insurer, Financial Guaranty Insurance Co., along with investors who would be wiped out by the plan, wants to take part in a lawsuit Detroit filed to cancel the debt, which was issued in 2005 and 2006 to prop up public worker pensions. FGIC and the investors claim that a trustee now opposing the suit won’t represent their interests adequately. FGIC faces $1 billion in claims over pension bonds if the city succeeds in throwing out the debt, Edward Soto, an attorney for the bond insurer, told U.S. Bankruptcy Judge Steven Rhodes in Detroit yesterday. Canceling the debt will free up money to pay other creditors, said Chris DiPompeo, one of the city’s attorneys. Letting FGIC and the investors participate in the lawsuit would make the case more complex and may disrupt the city’s plan to seek approval of its debt-adjustment proposal in July, he said.
http://www.bloomberg.com/news/print/2014-05-15/detroit-creditors-seek-t…
Additionally, Bankruptcy Judge Steven Rhodes refused to give some of Detroit's creditors unfettered access to art works and related documents in order to pursue a plan to increase the pot of money available for bankrupt Detroit to pay its debts, Reuters reported yesterday. Bond insurance companies Financial Guaranty Insurance Co. and Syncora Guarantee, as well as European banks and others had asked the U.S. Bankruptcy Court to direct the city and the Detroit Institute of Arts (DIA) to cooperate with their efforts to assess the art work in an effort to develop offers to monetize all or some of it. Judge Rhodes declined to force the city to cooperate with the effort, turning down a request to remove art work from the walls of the DIA for appraisal purposes. But he said that DIA was willing to give creditors access to works not on display.
http://www.reuters.com/article/2014/05/15/usa-detroit-bankruptcy-idUSL1…