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Judge-appointed bankruptcy expert paid over $500,000 for two months of work

Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is a bankruptcy discharge ?”

 

An expert appointed by a U.S. Bankruptcy Judge will be paid over $500,000 for services rendered in April and May in connection with the City of Detroit’s bankruptcy. Detroit is struggling to figure out how to address a staggering $18 billion debt.

Detroit Skline Charlotte Bakruptcy Lawyer North Carolina Debt AttorneyJudge Steven Rhodes named Boston-based Phoenix Management Services—headed by Marti Kopacz and an eight-person staff—as his expert witness in April. Kopacz and her team were ordered to prepare a report analyzing whether Detroit’s debt-management plan is feasible and whether financial forecasts and projections used by the city were reasonable.

Rhodes approved payments to Kopacz and her team of $101,370.71 and $334,882.58 for work done in April and May. In addition, he ordered the city to reimburse Phoenix $53,632.98 for expenses in May and $24,849.87 in fees and expenses incurred by Kopacz’s lawyer.

So far, Detroit’s bankruptcy has cost taxpayers more than $36 million. The point, the city says, is to save billions of dollars by dealing with long-term debt through bankruptcy. Emergency Manager Kevyn Orr produced a debt-adjustment plan that would reduce retiree pensions and make deep cuts in debt owed to bond holders. A federal mediator announced late Tuesday that Detroit’s largest police union backed the plan.

Rhodes must approve it, and he employed Kopacz and Phoenix to help him decide. That decision could be complicated by a July 8 report valuing the Detroit Institute of Arts collection at $4.6 billion. Supporters of Orr’s plan fear bond insurers will abandon the plan and push to sell the art to satisfy the debt.

Detroit’s bankruptcy is moving towards a trial to confirm the terms of the bankruptcy in August. Bond insurers and creditors like Syncora Guarantee Inc. are fighting to determine whether and how much they will lose on bond guarantees they made to the city. Syncora wants to recover on $176 million in bonds and $100 million in swaps it guaranteed.

It argued that casino revenue—filtering into the city through complex layers of transaction—is not city property, therefore it could seize the money to cover its potential losses on the debt guarantees. Judge Rhodes ruled against Syncora last August, but Syncora appealed. The U.S. Court of Appeals in Cincinnati ruled last week that Syncora had a right to have its appeal decided before Detroit’s bankruptcy is confirmed.

If the 6th Circuit Court of Appeals rules in Syncora’s favor, then casino revenues factored into the bargain Detroit is making with its 100,000 creditors and 20,00 retirees could be whisked from under the city’s feet, torpedoing what has been described as Detroit’s “grand bargain” out of bankruptcy.

If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.

 

 

About the Author

Bryan 1Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.

A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.

Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.

In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.

 

 

Sources:

http://www.mlive.com/news/detroit/index.ssf/2014/07/expert_witness_in_bankruptcy_c.html

http://bankruptcynews.dowjones.com/Article?an=DJFDBR0020140709ea79c3y8q&cid=32135027&ctype=ts&ReturnUrl=http%3a%2f%2fbankruptcynews.dowjones.com%2fArticle%3fan%3dDJFDBR0020140709ea79c3y8q%26cid%3d32135027%26ctype%3dts

http://www.detroitmi.gov/Portals/0/docs/EM/Reports/Expert%20Witness%20Report%20of%20M%20Plummer.pdf

http://www.crainsdetroit.com/article/20140707/NEWS01/140709917/detroit-facing-2-pivotal-circuit-court-appeals-on-bankruptcy#

 

 

Image credit:

http://commons.wikimedia.org/wiki/Detroit#mediaviewer/File:Comericatower.jpg

 

 

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