A judge has opened the first formal mediation talks aimed at striking deals between creditors and the city of the Detroit in the largest public bankruptcy in U.S. history.
Chief U.S. District Judge Gerald Rosen and five other mediators introduced themselves Tuesday to dozens of lawyers and Detroit emergency manager Kevyn Orr. The mediators include other judges and a former judge.
Every seat in the courtroom was full as Rosen gave a pep talk to lawyers representing Detroit, labor unions, bond holders and other creditors. He says agreements are better than years of "horrendous" litigation. Detroit says it has debt of at least $18 billion.
Mediator Victoria Roberts has been a federal judge in Detroit for 15 years. She told the lawyers this is personal as well as professional, saying "I'm a life-long Detroiter."
Each mediator is assigned to different creditors including unions, retirees, bond holders and pension funds.
Rhodes has said he hopes to have the city file a reorganization plan by March 1, 2014. But a city attorney says his team is working to have the plan in place by Dec. 31.
Michigan Gov. Rick Snyder signed off on Detroit's bankruptcy on July 18, calling it the only "feasible path" for a city whose population has plummeted to 700,000 from 1.8 million decades ago. Detroit has $18 billion in long-term debt.
In March, Snyder appointed a bankruptcy expert, Kevyn Orr, as Detroit's emergency manager. Orr had sweeping powers to reshape city finances but recommended bankruptcy to the governor after failing to reach any significant deals with creditors, including Wall Street bankers and Detroit pension funds. Many of those creditors, however, accused him of being inflexible and believe bankruptcy always was the plan.
Each party is ordered to be represented by no more than two attorneys and two party representatives.
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