Detroit bankruptcy firms ordered to defend bills

Robert Snell
The Detroit News

Detroit — Lawyers and consultants have 10 days to justify fees charged during Detroit’s landmark bankruptcy case before U.S. Bankruptcy Judge Steven Rhodes decides if the bills are reasonable.

Firms representing the city and retirees charged about $170 million and Rhodes is in the process of determining the reasonableness of fees in the biggest and most expensive municipal bankruptcy in U.S. history.

On Monday, Rhodes gave the various firms 10 days to defend amounts charged during the case but warned that the comments must be “civil” and “fact-based.”

“Each party’s comments may address the fees of its own professionals as well as the fees of other parties’ professionals, either to support the disclosed fees or to suggest that the fees are not reasonable,” Rhodes wrote in a two-page order.

The bankruptcy bill totaled $170.2 million before a state reimbursement of $5.29 million, which brought the total fees paid from the city’s general fund to $164.91 million.

The various firms agreed to slash their bills following closed-door talks after Mayor Mike Duggan’s administration worried that the overall expense was siphoning away money needed to restructure the city. The precise amounts have not been disclosed due to confidential negotiations.

Among the top paid professionals are the city’s lead law firm, Jones Day, at $57.9 million; investment banking firm Miller Buckfire, $22.82 million; restructuring firm Ernst & Young, $20.22 million; and the operational restructuring firm Conway MacKenzie, $17.28 million.

Dentons US LLP, a law firm that represented the official committee of city retirees, received $15.41 million.

The city’s two pension funds paid attorneys at Clark Hill $6.25 million and financial advisers at Greenhill & Co. $5.71 million.

The filing shows that Detroit’s bankruptcy mediators were paid $980,000, though none of the money went to federal judges who served on the mediation team. Also, the city’s two pension funds paid consultants and attorneys about $12 million to fight the bankruptcy case.

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