%1

The judge overseeing Detroit's historic bankruptcy petition set Dec. 3 as the date for issuing his decision on whether the cash-strapped city qualifies as bankrupt under federal law, Reuters reported yesterday. Bankruptcy Judge Steven Rhodes will hand down his ruling in federal bankruptcy court in Detroit at 9 a.m. EST on that day. Judge Rhodes also is considering a request from one of the objectors, the American Federation of State, County and Municipal Employees, Detroit's largest union, which earlier this month asked the judge to allow any appeal to go directly to the U.S. 6th Circuit Court of Appeals, bypassing the U.S. District Court in Detroit. The city's unions, public-sector retirees and two pension funds have objected to Detroit's bankruptcy filing, arguing that Kevyn Orr, Detroit's state-appointed emergency manager, purposely drove the city into bankruptcy court and did not negotiate with creditors for an out-of-court settlement.

Detroit's state-appointed emergency manager and its mayor-elect announced the appointment yesterday of a new chief financial officer for the cash-strapped city, Reuters reported yesterday. John Hill, the former chief executive officer of a business-backed civic group for Washington, D.C., was tapped to lead Detroit's finance department and work on the city's restructuring team, according to the announcement by Emergency Manager Kevyn Orr and Mayor-elect Mike Duggan. Hill, a certified public accountant, headed Washington's Federal City Council from 2004 to 2012. He previously served as executive director of that city's Financial Control Board, which was created by Congress in 1994 to take over the U.S. capital city's finances and budget.

Detroit Emergency Manager Kevyn Orr's office said yesterday that Detroit has paid almost $23 million in fees to lawyers, consultants and financial advisers through Oct. 1, including nearly $11 million to law firm Jones Day, which is representing the city in bankruptcy court, Reuters reported today. Detroit, which is awaiting a decision from a federal bankruptcy judge to determine if it is eligible for bankruptcy protection, has agreed to pay more than $60 million to more than a dozen firms aiding in its restructuring efforts, Orr's office said. Through Oct. 1, the city has paid $4.59 million to Conway MacKenzie, a Detroit area restructuring firm, and $4.17 million to accounting firm Ernst & Young. Accounting firm Plante Moran was paid $1.5 million through Oct. 1 and investment banking firm Miller Buckfire was paid $1.2 million.

Detroit could end up paying almost twice as much in interest as previously disclosed on a $350 million loan arranged by Barclays Capital, according to a fee letter made public yesterday after a judge ordered it unsealed last week, Reuters reported today. Bankruptcy Judge Steven Rhodes on Thursday thwarted efforts to keep the cost of a debtor-in-possession (DIP) financing under wraps, noting that the fee letter was subject to Michigan's Freedom of Information Act. The letter disclosed that Barclays would collect 1.25 percent of the loan, but not less than $750,000, for committing to a controversial financing deal with Detroit. The city and Barclays Capital had requested the fees be kept a secret because the details are commercially sensitive and might raise the price of the loan. One financial adviser who specializes in restructuring work said opponents of Detroit's proposed bankruptcy could object to the "market flex" provision of the fee letter by making the argument that the flex provision essentially allows the interest on the loan to be raised to 6.5 percent from the 3.5 percent previously cited by the city. Barclays is allowed raise the rate within 90 days of the closing of the loan if the bank is unable to find investors to buy up to half the loan, according to the unsealed fee letter.

Detroit must disclose the fee structure of a $350 million debtor-in-possession financing agreement, Bankruptcy Judge Steven Rhodes ordered yesterday, turning back the city's efforts to keep secret the cost of landing a controversial loan package, Reuters reported yesterday. The city and Barclays Capital had requested the fees be kept a secret because the details are commercially sensitive and might raise the price of the loan. Detroit reached the loan agreement with Barclays, a unit of Britain's Barclay's Plc, in October, but the deal still must be approved by Judge Rhodes. About $230 million of the proceeds would be used to end interest-rate swaps contracts that the city has with Bank of America Corp's Merrill Lynch Capital Services and UBS AG. The swaps were related to debt sold in an effort to help Detroit make payments into city pension funds. About $120 million of the DIP financing would be used to improve city services.