Buckfire’s testimony has veered off into highly technical areas. He is discussing the intricacies of Wall Street finance. Buckfire has defined a “Dutch Auction” as a manner in which a unsecured creditors can bid into the process of getting cash out of a bankrupted entity. He has also defined a “waterfall” which is how lienholders end up getting paid before other creditors when money is paid from a bankrupt entity.
The objector attorney grilling Buckfire is trying to establish Buckfire’s role in making certain retiree pensions were lumped in with other unsecured creditors that in effect made them less able to collect any money in retirement.
The attorney asked Buckfire if he felt the retirees were being treated fairly in the restructuring plan. Buckfire said “they are treated no worse or no better than any other creditor.”
He went on to say the opening offer made as part of the restructuring plan was fair because it treated all creditors fairly.
He said a lot of municipalities have attempted in the past to favor some creditors over others and Buckfire said “that has not proven to be an effective strategy. Everyone [meaning all unsecured creditors] wanted to be treated better than others.” The city wanted to be viewed as being impartial how it treated its creditors.”
The cross examination of Ken Buckfire continues. There are intricate questions regarding values of Detroit art, the city’s side of the Detroit/Windsor Tunnel and the water department. The Judge was concerned about the relevance of the questioning saying he was not going to allow testimony about work accomplished by Mr. Buckfire after the bankruptcy filing.
Of the water department sale Buckfire said, “it would be a very fortunate outcome for our customers” if the department were allowed to be made part of a regional authority where the city would receive annual lease payments as part of the deal. Buckfire is involved in those negotiations that are ongoing.
The objector union attorney wanted to find out about insolvency.
Attorney: “When did you decide the city was insolvent?”
Buckfire: “I didn’t decide” He then went into the definition of insolvency as an inability to pay debts when they are due. He said “it was evident to me.”
Attorney: "When did you find out Detroit was insolvent."
Buckfire: “May 7th when I first saw the projections of short term cash flow, projections from Ernst and Young.”
There was a humorous moment this morning.
As the questioning went on the objector union attorney in asking Buckfire about a meeting “at city airport” when he really meant to ask about the public presentation of the restructuring plan at Metro Airport in June. Buckfire leaned into the microphone and said “you mean Metro airport.” Of city airport he said “no one would have a meeting there.”
As the morning wore on the questioning has been increasingly esoteric, delving into deep corners of bond finance and how bonds are insured and what amount of the city’s debt is insured by bond insurers.
Buckfure did say “substantially all of the city’s debt is insured. Of $6 billion in water and sewer debt, $5 and a half billion is insured and the general obligation bond debt is insured.”
The court is adjourned until 1:45 p.m, where Ken Buckfire will return to the stand.
1:50 PM --
We are now back in session with Ken Buckfire still on the stand.
Pension attorney Jennifer Green is asking Buckfire about the possible sale of DIA art.
2:30 PM --
Buckfire said discussions with DIA officials for the possible sale of art was started in the summer of 2013 and he tried to convince officials there it was in everyone’s best interest to try and find a way for this situation to be resolved that would be beneficial for everyone involved. Buckfire said these discussions did not bear any fruit and ended.
Jennifer Green, a pension lawyer began her cross examination of Ken Buckfire. She started digging into Buckfire’s advance knowledge of Detroit’s Chapter 9 bankruptcy filing. She produced an email that was between two DIA officials that said they had discussed a lot of things in a meeting with Buckfire and included the line “a bankruptcy filing will likely be in July.”
Green wanted to know “Is it your testimony that you did not share with anybody at the DIA a possible bankruptcy filing in July.”