Detroit — The bankrupt city was ordered Monday to pay $10,000 for inadvertently sharing confidential documents about closed-door negotiations among creditors.
The misstep first surfaced in May during a hearing to resolve discovery disputes between Detroit and its creditors over information to be used at a trial this summer.
On Monday, U.S. Bankruptcy Judge Steven Rhodes ordered Detroit to pay bond insurer Assured Guaranty Municipal Corp. for expenses associated with the city’s error.
“Assured should not be required to bear any expenses because of the city’s mistakes,” Rhodes said during a hearing Monday.
Rhodes said he was “quite outraged” by Assured’s request for $45,000 and said he nearly denied the bond insurer’s request based on the amount even though Detroit’s law firm Jones Day clearly violated a court order preventing disclosure of mediation-related information.
Jones Day lawyer Geoff Irwin told the judge the law firm inadvertently mailed documents to creditors May 6 that involved closed-door mediation negotiations. A team of mediators is overseeing negotiations between the city and creditors.
Irwin said about 120 documents were mailed to creditors.
Jones Day has staff that reviews every document sent from the city's bankruptcy firm.
The staff has to review about 1.2 million documents, Irwin said.
On Tuesday, the judge is expected to hear from a few dozen retirees who have objected to Detroit’s debt-cutting plan.