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Rhodes on bankruptcy: We love to give a second chance

Holly Fournier
The Detroit News

Ann Arbor — Retired judge Steven Rhodes on Wednesday gave an insider's view of Detroit's bankruptcy case, praising lawyers who "advocated zealously for their clients" and detailing much of his decision-making process.

"We believe in the mission of the City of Detroit. It's who we are," Rhodes said. "We always love to give people a second chance, a fresh start, to forgive them. That is, after all, what bankruptcy is about."

Rhodes discussed the 17-month bankruptcy Wednesday morning at a Bank of Ann Arbor breakfast in his honor at the Barton Hills Country Club. His comments spanned topics from his hopes for Detroit's future to personal opinions on media coverage.

Rhodes emphasized multiple times that he wanted to allow media to broadcast directly from his courtroom during bankruptcy proceedings but had been prevented by federal court policies.

"I believe in a public case like this the judge in charge should have the discretion to open it up to the media," he said. "If you want my support in that effort, you'll have it."

Rhodes said he wished the media had pushed the issue of camera access to the courtroom.

"I wish that someone in the media had made a formal issue out of this by filing a First Amendment motion," he said. "It's likely that I would have granted that motion but it never happened."

Rhodes kicked off his speech detailing Detroit's decline and outlining the details of the bankruptcy plan he approved in November.

Leading up to bankruptcy, Detroit's lack of municipal services "was causing its residents real injury and real hardship," Rhodes said, adding many Detroiters felt angry and disenfranchised by an emergency manager appointment they felt was racially motivated.

But ultimately, bankruptcy resulted in a plan "most of Detroit's retirees, employees and its financial creditors supported," Rhodes said.

That plan dissolved more than $7 billion of the city's $18 billion of debt, enhanced the credit rating from junk status to "investment grade," and included "a 10-year, $1.7 billion investment to set (the city) on a path to restore municipal services and to revitalize itself," Rhodes said.

The city also is now ready to address blight, explore information technology development, fix street lights, and improve fire and EMS training, buses and parks, he said.

Rhodes was introduced Wednesday by Gov. Rick Snyder, who said he identified the crisis in Detroit before he took office as governor in 2011.

"I knew we were going to have to do extraordinary things in Detroit," he said. "I didn't know it was necessarily going to be bankruptcy."

Snyder criticized previous "lack of attention" paid to Detroit's decline.

"We didn't do much about it, we just watched the decline happen," he said. "The easy answer was to sort of say, 'It's Detroit.' That wasn't a good answer nor was it the right answer."

Snyder said he knew the city was in good hands when Rhodes emerged as the judge to usher Detroit through bankruptcy.

"From Day One, I thought we had found the right person," he said. "(Rhodes) set that leadership tone."

Rhodes during his speech Wednesday said "the smartest thing" he did during the bankruptcy was to appoint U.S. District Chief Judge Gerald Rosen as mediator in the case.

"He put together a team of great mediators and that team deserves much of the credit," Rhodes said.

Rhodes spent the bulk of his speech praising others he said deserved attention for their work in the bankruptcy case, including lawyers who fiercely litigated while remaining civil in the courtroom.

"It was downright pleasant to be with them in court. I liked it, it was even fun sometimes," Rhodes said, to laughter in the crowd of more than 100. "But don't misunderstand me here. They advocated zealously for their clients."

All lawyers involved in the case possessed the "trifecta of skills," Rhodes said.

"Litigation skills, negotiation skills and the good judgment to know when to litigate and when to negotiate," he said.

Rhodes admitted some parties were left disappointed by the bankruptcy results, even as most creditors, employees and retirees supported the plan.

"The city's plan paid 10 percent" to general unsecured creditors, including people with injury claims against the city, Rhodes said. People concerned with water shutoffs also were disappointed, he said.

Rhodes defended his earlier ruling that "there is no constitutional right to affordable water," comparing it to the lack of right to affordable housing, food or heat.

"I had very mixed feelings about that outcome," he said. "Obviously, people need water to live."

Rhodes said his goal from the beginning was to keep the bankruptcy proceedings open and transparent, so residents could stay informed and involved in the process.

"One of the hardest parts of the case for me was the fact that it was as much a political case as it was a legal case," he said.

The judge invited people into the courtroom to speak on their concerns, and 93 unrepresented parties took him up on the offer during the eligibility phase, Rhodes said. Forty-five of those complainants appeared in court to address Rhodes.

"Although it was a bit burdensome, it sent a powerful message about the openness of my process," he said.

Rhodes mentioned a handful of issues he had with media coverage of the bankruptcy, including publication of where he lives and the identities of family members.

The media also had "an odd fascination in my participation in the rock and roll band that I play in," Rhodes said, to more laughter from the crowd.

Rhodes said as the bankruptcy process drew closer to a conclusion, he focused on ensuring any proposed plan was feasible and able to be implemented by the city.

"I did not want to become known as the judge on Detroit's first bankruptcy case," he said, highlighting his hope that the city avoids future litigation.

One of his goals was to preserve artwork housed at the Detroit Institute of Arts, he said.

"To sell the art would be to forfeit Detroit's future," he said, adding he did not find it to be a difficult decision.

During a question-and-answer period following Rhodes' speech, he indicated the city's recovery from bankruptcy is being overseen by the Detroit Financial Review Commission.

Looking to the future, Rhodes said the Detroit Public Schools need attention and residents should vote for candidates who will "continue this commitment" to the city's revival.

"Their memory of that anger (toward emergency management) is what will prevent this from happening again," he said.

Rhodes said he was planning to retire when the bankruptcy case came across his desk, but he is thankful for "the opportunity to have potentially a lasting impact in history."

"We were truly part of team," Rhodes said of the lawyers, elected officials and others who worked on the case. "This was a team effort. Now I'm glad I'm done with it."

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