Detroit residents and retired public workers were given temporary control of the city’s historic bankruptcy trial to present their own case against its $7 billion debt-cutting plan, which includes pension reductions, Bloomberg News reported yesterday. Bankruptcy Judge Steven Rhodes set aside today for opponents who don’t have lawyers to try to persuade him to reject the plan. With the first presentation, the usual rules and traditions that govern federal trials began breaking down. A retired city employee, Wanda Jan Hill, got to question one of Detroit’s lead bankruptcy lawyers, despite a rule generally barring attorneys from testifying about the case they’re working on. Under questioning by Hill, Heather Lennox, a partner at the Jones Day law firm, acknowledged the city didn’t warn retirees in key documents that they would have to pay interest on money clawed back from a savings plan that overpaid some workers. Detroit is nearing the end of a bankruptcy trial that began Sept. 2. Since filing the biggest U.S. municipal bankruptcy case in history in July 2013, the city has cut deals with almost all of its major creditors, including pensioners. Yesterday, the last large holdout creditor, bond insurer Financial Guaranty Insurance Co., suspended its fight with the city to try to resolve its objection to the plan. FGIC and Detroit said that they will return to court today and either announce a deal or continue the trial.
