Congress Approves Student Loan Interest Plan
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Detroit Property Owners Can File Tax Appeals Not Collect
Detroit property owners can file tax appeals against the city during its bankruptcy, a federal judge ruled, but they are barred from collecting refunds, Bloomberg News reported yesterday. Michigan Property Tax Relief LLC this week asked the judge overseeing Detroit’s $18 billion bankruptcy to let its clients pursue their claims. The company said that they have been blocked by the Michigan Tax Tribunal from challenging tax bills because of the bankruptcy. Michigan Property Tax Relief and its clients, however, “shall not take any action to prosecute the appeals or collect any refund of any pre-petition property tax overpayment absent further order of this court,” Judge Rhodes said in an order. The case is City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).
Michigan Attorney General Sees No Conflict in Defending Detroit Retirees
Michigan Attorney General Bill Schuette says that he sees no conflict in representing the state’s governor, who approved Detroit's bankruptcy filing, while at the same time representing Detroit’s retirees, who assert that the filing is illegal, Reuters reported yesterday. In both cases, Schuette said that he is defending Michigan’s constitution. He also pointed out that his office is often called upon to appear on conflicting sides of the same case. “You can’t pick and choose which parts of the constitution to enforce,” Schuette said. Earlier this month, Schuette defended Michigan Governor Rick Snyder in three state court cases challenging the governor’s power to approve a bankruptcy filing for Michigan’s largest city by Detroit Emergency Manager Kevyn Orr. Detroit retirees, workers and the pension funds that filed the cases argue that the law empowering Snyder to approve the bankruptcy filing is unconstitutional because the bankruptcy threatens pension benefits, which are specifically protected by Michigan’s constitution.
San Bernardino Bankruptcy to Get Nevada Judge as Mediator
Bankruptcy Judge Meredith Jury, who is presiding over San Bernardino, Calif.’s chapter 9 case, said that she will appoint a judge who oversaw a $6.5 billion casino reorganization to mediate talks between the city and its creditors, Bloomberg News reported yesterday. Judge Jury said that she will issue an order next month explaining what issues the mediator, Bankruptcy Judge Gregg Zive, will help tackle. Judge Zive, who is based in Reno, Nevada, presided over the case of Station Casinos Inc., which cut debt, reorganized and left bankruptcy in 2011. Judge Jury asked the city and creditors, which include investors that hold more than $50 million in pension-obligation bonds and the California Public Employees’ Retirement System, to submit matters they want Judge Zive to address, including a plan to cut debt and a dispute with the state over tax collections.
Water Utility Blasts Jefferson Countys Restructuring Plan
The Birmingham, Ala., water department is blasting the proposed $1.9 billion refinancing deal that Jefferson County leaders say is key to getting the county out of bankruptcy, arguing that the deal could leave the county worse off as sewer debt payments climb over a 40-year repayment period, Dow Jones Daily Bankruptcy Review reported today. In court papers filed on Monday, lawyers for Birmingham Water Works, which handles payments from the Jefferson County sewer system customers, said that the county’s proposed refinancing deal commits it to paying “very high interest rates” and doesn't alleviate enough of its debt burden.
Detroit Council Pursues Congressional Hearings on Municipal Bankruptcy
The Detroit City Council yesterday approved a resolution echoing the call for congressional hearings on the increasing use of municipal bankruptcy filings across the nation and whether Detroit is misusing the process to slash retiree pensions and healthcare coverage, the Detroit News reported today. The resolution, introduced by member JoAnn Watson, was crafted in support of a request by Rep. John Conyers (D-Mich.) for the hearings to evaluate local and national ramifications after Detroit filed to pursue the largest municipal bankruptcy filing in U.S. History. The council’s unanimous vote in favor of the measure comes a day after Michigan Attorney General Bill Schuette officially joined Detroit’s bankruptcy case in an effort to protect pensioners from having their retirement benefits cut in the chapter 9 debt restructuring. Bankruptcy Judge Steven Rhodes has not yet determined whether Detroit is eligible for bankruptcy protection from its creditors, who are owed an estimated $18.5 billion.
S&P Despite Detroit U.S. Public Finance Ratings Improve
Rating trends across the U.S. public finance sector were “decidedly positive” in the second quarter despite the default by Detroit, Standard & Poor’s Ratings Service said yesterday, as it noted that its upgrades of municipal debt outpaced downgrades, Reuters reported yesterday. The credit ratings agency said in a report that it raised 194 ratings and only lowered 94 during the second quarter, the third straight quarter in which municipal debt upgrades outpaced downgrades. Detroit, which recently filed for the largest municipal bankruptcy in U.S. history, accounted for five of the seven defaults in the quarter. Fritch, Texas, and West Penn Allegheny Health System in Pennsylvania also defaulted on their debt. S&P said the defaults “were a higher number than normal.”
Judge Proposes Fast Pace in Detroit Bankruptcy Case
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Detroit Bankruptcy Judge Urged Not to Halt Tax Appeals
Detroit’s $18 billion bankruptcy shouldn’t halt efforts by property owners to lower their taxes, a company that advises them said in a court filing seeking an exemption from federal court rules, Bloomberg News reported yesterday. Michigan Property Tax Relief LLC filed a motion asking Steven Rhodes, the judge overseeing the bankruptcy, to let property owners file tax appeals. The company has several dozen clients that have been blocked by the Michigan Tax Tribunal from appealing their tax bills because of the bankruptcy, the company said in a court filing. The company’s “clients desire to simply adjudicate the amount of their tax liability,” Michigan Property Tax Relief said in court papers filed yesterday. “They are not seeking to file any collection actions or pursue any tax refunds at this time.”
Analysis Naming Mediator Brings Authority to Fractious Detroit Bankruptcy Case
Of all the legal maneuvers so far in Detroit’s bankruptcy case by unions or the city’s emergency manager, the one that may have the most impact was when the judge decided to name a mediator, according to a Reuters analysis today. In a July 23 filing, Bankruptcy Judge Steven Rhodes said that he would appoint another federal judge, Gerald Rosen, as a mediator. “I think that’s going to be the key move in the case, in terms of getting it toward a solution,” said Bankruptcy Judge Christopher Klein, who is overseeing the bankruptcy of the town of Stockton, Calif., during an ABI media teleconference last week. Rosen is the chief district judge of the U.S. District Court for the Eastern District of Michigan. Judge Rhodes in his court filing deemed a mediator “necessary and appropriate” but did not specify which issues he feels should be mediated. He has scheduled a hearing on his proposal for Friday.