Local 4 Business Editor Rod Meloni was in court Friday as a trial continued over whether Detroit can borrow $350 million with Barclays of London.
Court resumed promptly at 10 a.m. Friday.
Unfortunately, the audio was not working and the city started its pleadings and announced changes in how it intends to proceed with the forbearance agreement and we could not hear all of what was said.
We are now trying to recover on this precisely what the city’s attorney Tom Cullen from Jones Day was saying.
We do know that Kevyn Orr will be deposed [questioned by attorneys] in Washington, D.C. on December 31st.
There is still concern that the city keep quiet some of its internal deliberations as it intends to keep open its right to file litigation against UBS and Bank of America in the future.
Jones Day’s attorneys are now quickly reading to us their statement:
We have been meeting with varios stakeholders over the past day. The parties are attending court ordered mediation Monday and Tuesday of next week. If the city, as it hopes can come to an agreement with UBS and Bank of America [the swap banks] then a deposition with the objector parties will take the deposition of Kevyn Orr on Dec 31 and make Mr. Orr available to testify on the first date the judge is available.
At the same time, we [the city] we are doing whatever is necessary to protect the city and its residents and take whatever action is necessary. Litigation hold notices have been sent to a list of parties with the intention of possibly suing the swaps banks should an appropriate agreement not be attained.
It will do so expeditiously.
The court is in the process of setting its calendar and now the court is adjourned.
So, let’s recap a furious 25 minutes in federal court.
The city of Detroit and its lawyers are in talks with the swap banks Bank of America and UBS along with a long list of attorneys.
The goal is to do what Judge Stephen Rhodes has asked and keep talking about finding a better forbearance agreement than the one already struck that has the city paying 75% on the dollar to settle the swaps agreement Kwame Kilpatrick agreed to in 2005 and the city defaulted on in 2009.
The cost of that under the negotiated settlement would be $230 million to borrow $350 million.
The judge wants a much smaller cost to the city for this deal, so they are trying to figure that out.
Judge Gerald Rosen, who is the mediator in the Detroit bankruptcy, has asked the parties from this trial, the city, the objector parties [Bank insurance companies and the pension funds among others] and the banks lawyers to attend mediation sessions next Monday and Tuesday - which is Christmas eve. The talks to reach an agreement will stop for the holiday and then continue. The City has agreed to alert all the parties involved where the negotiations over a new forbearance agreement are by December 27th. Should they reach an agreement, Kevyn Orr will then have to face a deposition[questioning from objector party lawyers] as to how the deal came together and why the city agreed to the new deal on December 31st, New Year’s Eve in Detroit.
Should a deal not happen, the city has threatened UBS and Bank of America with a lawsuit over the legality and propriety of the original swaps deal.
Hearings that would move this trial forward will continue in early January.
Download: Detroit Bankruptcy filing December 2013