August 22, 2013 at 10:42 am

Bankruptcy judge Steven Rhodes

Bankruptcy judge has tough-but-fair reputation

Jurist playing major role in shaping Detroit's future

So much of Detroit's future will be determined in the Theodore Levin United States courthouse. (Courtesy: Library of Congress)

Judging by his resume and those who know him, there are few jurists better qualified to preside over Detroit’s precedent-setting bankruptcy case than Steven Rhodes.

Rhodes, 64, has spent nearly three decades on the bankruptcy bench in Detroit, overseeing the high-profile unwinding of major automotive suppliers as well as countless cases of individual Michiganians looking for a financial second chance. He even helped change the rules of the court in an unsuccessful bid to convince General Motors and Chrysler to file their Chapter 11 bankruptcies here instead of New York.

During his time on the bench, Rhodes has developed a reputation as a tough-but-fair jurist with an encyclopedic grasp of the bankruptcy code.

“He’s extremely focused and sharp, and he can really analyze the issues,” said Kathy Bazoian Phelps, a bankruptcy attorney in Los Angeles who recently co-authored a book on Ponzi schemes with Rhodes. “He runs a very efficient courtroom, he is a no-nonsense type of a judge, and I think that a case like the Detroit bankruptcy needs a judge like that.”

Lawyers say Rhodes can be demanding and intimidating in the courtroom. But inside his chambers and outside the courthouse, he presents a softer persona: a bike-riding vegetarian from Ann Arbor who plays rhythm guitar for the American Bankruptcy Institute’s quasi-official classic rock house band, the Indubitable Equivalents.

Sometimes he even brings his dog to work.

That surprised one of the attorneys in the high-profile Collins & Aikman bankruptcy, over which Rhodes presided from 2005-07. So did the speed with which the judge resolved the many contentious issues that arose during the dissolution of the Southfield-based auto supplier.

“He used his chambers very effectively,” said the attorney, who wished to remain anonymous because his firm could still have business before Judge Rhodes. “There were a couple of occasions when he summoned the lawyers back there for a good, frank, off-the-record discussion.”

That is where he met Rhodes’ dog.

Rhodes “moved quickly and didn’t let the case languish as too often happens in big corporate bankruptcies,” the attorney said. “He was focused on the best result for the debtor and the stakeholders.”

Rhodes is a jurist with little patience for the ill-informed and unprepared, and some who have been stung by his acid tongue call him difficult and intimidating. But many who have appeared before Rhodes say those attorneys only have themselves to blame for bad experiences before his bench.

“A lot of people are afraid of him. But he’s very fair. He just demands that everyone who comes into the courtroom be prepared and not waste time,” said Neal Brand, a Southfield bankruptcy attorney who was sworn in by Rhodes and has argued hundreds of cases before him. “He’ll listen to any legal argument you have, but it has to be an organized legal argument.”

Brand has plenty of advice for attorneys on all sides of the Detroit Chapter 9 case.

“I never would go in front of him unprepared. If he asks you a question and you don’t know the answer, it’s very bad to make up the answer. He’ll eat you up,” Brand said. “You have to know your stuff. He’s not a man who likes a lot of excuses.”

Takes time to teach

Despite having the busiest docket of any judge in the U.S. Bankruptcy Court’s Eastern District of Michigan, Rhodes still finds time to share his experience, teaching classes on bankruptcy law at the University of Michigan Law School, from which he graduated in 1972.

“He is someone who is intimately familiar with the cutting-edge practice of bankruptcy law,” said the school’s dean, Evan Caminker. “I’ve always found him, as I think my colleagues did, to be extremely thoughtful.”

Rhodes was an adjunct professor at the university from 1992 to 2003 and he is returning to teach a course this fall — even as he presides over what is likely to be one of the most precedent-setting bankruptcy cases in recent memory.

Caminker expects it will be a hard class to get into.

“He’s very highly regarded and certainly was viewed favorably by his students,” Caminker told The Detroit News. “Steve brought his experience — not just from his years in practice, but also his years on the bench — and helped our students understand not just the doctrinal issues, but how they play out in real cases. Steve added a special dimension to the faculty and one that we’re really excited about having him come back to share.”

Some who know the judge are surprised he did not become a full-time professor. Or a rabbi.

Such is his scholarly bent.

The Rhodeses, who live in a leafy neighborhood in Ann Arbor, have two daughters: Marjorie Rhodes, an assistant professor of psychology at New York University, and Sara Lerner, a U-M grad who now does direct selling of organic food products in New Jersey.

Those who know the judge say his background and personal life will inform the decisions he makes in the Detroit bankruptcy case in important ways.

“You’ve got to be a mensch,” Rhodes is fond of saying when weighing the tough decisions, referring to the Yiddish term for a man of integrity.

Respected by colleagues

Dean Caminker was not surprised to hear that Rhodes had been picked to preside over the largest municipal bankruptcy in U.S. history, a case with huge ramifications for bondholders and pensioners across the nation.

“It made perfect sense. It is my impression that he is extremely highly regarded by his fellow judges, both on the bankruptcy court and also more generally in the Sixth Circuit,” Caminker said. “Given his stature on the bench and how highly respected he is, it didn’t surprise me in the least.”

Just how highly other jurists think of Rhodes was reflected in the selection process.

Before tapping him for the case on July 19, Alice Batchelder, chief judge for the U.S. Court of Appeals for the Sixth Circuit, consulted with other judges, including Rhodes’ boss, Phillip Shefferly, chief judge of the U.S. Bankruptcy Court’s Eastern District of Michigan.

“I have canvassed each bankruptcy judge in the Eastern District of Michigan. It is our unanimous and very strong belief that (Rhodes) is the bankruptcy judge best qualified to preside over the City of Detroit Chapter 9 case,” Shefferly wrote in a letter to Chief Judge Gerald Rosen of the United States District Court for the Eastern District of Michigan, which was forwarded to Batchelder as she pondered her decision.

“Judge Rhodes is one of the most accomplished bankruptcy judges in the country, and is nationally recognized as such.”

Dean Caminker agrees.

“There are great challenges to be faced here,” he said, “but I think Steve is the perfect person to face them.”

Bryce.Hoffman@detroitnews.com
(313) 222-2443
twitter.com/brycehoffman

Judge Steven Rhodes, right, with wife Katherine. (Facebook)