LIVE BLOG: Detroit bankruptcy hearing

Inside the courtroom with Roger Weber and Local 4 intern Ally Illitch


DETROITLocal 4 is inside federal court as Judge Steven Rhodes presides over a status conference in Detroit's Chapter 9 bankruptcy case.

Complete coverage: Detroit Bankruptcy

10 a.m.

There are about 30 people inside the courtroom. Those inside the courtroom are not showing many facial expressions. Judge Rhodes is doing most of the talking. He wants to get right to the point - focusing on courtroom deadlines.

10:05 a.m.

Judge Rhodes told the courtroom the courts role in this case is to resolve legal issues the parties raise as the city movies through process. He said there are two main challenges we can expect the city to face: Establish that it is eligible if it meets that challenge and to establish plan that meets requirements

He said the parties may present other issues to the court: Whether to approve cities assumption and rejection to contracts and whether to approve of certain settlements. Judge Rhodes will determine what dates and deadlines to set as the case comes to a conclusion whatever it may be. He requested input from attorneys as well as their full cooperation. He said he recognizes and appreciates public interest and facilitate to the greatest extent possible

Judge Rhodes emphasized in this chapter 9 case the city has elected and appointed officials and officers remain in full control of the city and its main operations and as a result court has no role to play in managing or running the city. He said any complaints should be continued to be directed to the city and there is nothing the court can do about those matters. He said Chapter 9 states it is the role of the city to see if the city meets requirements for Chapter 9 - but not the responsibility of the city to dictate.

Read: Detroit's bankruptcy judge releases proposed deadlines in case

10:24 a.m. 

David Heiman addresses the court. He is a bankruptcy and restructuring attorney and has played a key role in many of the largest Chapter 11 and out-of-court business restructuring in the United States.

Heiman: We all know we are in a very serious situation here, so rather than drag everybody through the blow by blow… would like to refer the court to the declaration.. pgs 52-73. There has been a significant effort into preparing that and was followed up by meetings with creditors. Proposal 128 pages made public on the city website for all to see and from our standpoint we feel we have done our best to lay open the relevant aspect to the city's finances to everyone. We have had discussions in the last week and scheduled for next week. In terms of the status of discussions it is clear there are differences

Differences aren't surprising in terms of the limited resources that the city has available. There was a proposal made and it is out on the table.

We are continuing to talk. We will hopefully continue to talk everyday as we attempt to get through this case. There are significant differences, which are based on our limited resources to pay our creditors and their perspective to complaints

How to Reach differences:

By Orr's team of professionals to make himself available..

I believe we have had constructive discussions that have been civil and friendly and when it comes to the point when saying how do you view our proposal? No one likes it

We welcome the idea of mediation because there are very serious issues here, we have limitation.. we would like to talk to creditors consistently

Proposed dates and deadline - schedule for resolution of eligibility

1.     Did the city negotiate in good faith?

2.     Did the governor properly authorize in light of what is argued to be the constitutional protection of rights

Rhodes- does anyone see any other eligibility issues?

10:35 a.m.

Many representatives in the courtroom seem to be concerned about some an August 29th hearing deadline that has been suggested - saying there just isn't enough time to prepare.

11:29 a.m.

Robert Gordon, a lawyer for retired police officers and firefighters said he is having status conferences every 3 days while negotiating. He said the city is meeting its payroll obligations but that should not be used with an excuse to move through because the stakes are high

Judge Rhodes asked who is in a better position to determine when the actual mediation sessions should begin.. either a mediator or the court? He said a mediator could meet regularly and exchange expedited information.

11:35 a.m.

Judge Rhodes questions whether to to appoint a fee examiner. On record he said that he has no reason to believe that the city's fees will be excessive or otherwise improper. He is flexible regarding the process of selecting the fee examiner.

There is further discussion on hiring a fee examiner and more talk about future court dates. Judge Rhodes said the court is requesting no hearings be held the morning of September 4 - and if any were set that day they be scheduled for the afternoon.

12:10 p.m.

Motion regarding the appointment of committee retired employees.

Representative for committee retirees: Retiree claims encompass retire benefits. "Many of the cities obligations stem from old collective bargain units. We don't have clean guidelines."

12:23 p.m. 

Rep. for UAW

We want to emphasize three points:

1. Funding issue. "We consider funding to be very critical here."

2. Reservations of rights

3. Adequate representation

He requested some guidance by the court to deal with practical considerations 

In terms of participation - if there is a group that feel left out or excluded -credibility of the process would be questioned and would not do any good for a committee like this to form.

Says unions like UAW that are familiar with bankruptcy process are very skilled in making the internal decisions to undertake. They do not see an inherent conflict in taking on these roles as whole and has not throughout history and these are decisions that labor make.


Rep. for UAW

Says It would be helpful for court to provide guidance for the eligible pool and guidance from the court would help to make the process work. Adequate representation is something UAW views as important and any group that wants to participate should be permitted to participate - she says there should not be a size limit.


Michael-rep. himself retiree DPD

Says in terms of structure of committee there should be a distinction for retirees and current employees who have invested interest. 12,000 employees have invested interest in health benefits 


Dennis-Rep. himself-- retiree of the city of Detroit

Says retirees are not part of the labor union


Maria - Rep. U.S. Trustee

Says they do not take a position on the motion but filed a response to the UAW statement that was filed yesterday because of what they are asking. "We have started dicussions with the city and other parties we have been working with." She says they are doing this as quickly as possible, "We will do everything we can to promote a committee as promptly as possible."

12:58 p.m.

Just Rhodes requests a 15 minute recess to contemplate committee issue.

1:18 p.m.

Judge Rhodes says the court commends and accepts the city's offer to pay the reasonable expensive for the committee and proposes that all such professional expenses be examined. He says regarding the issue of scope. Important part of the process to represent the retirees of the city of Detroit

Issue with Adjusting Dates and deadlines:

Wants Reflect interest of the committee. Judge Rhodes says the court concludes interest can be accommodated by granting committee period of time to file objections to eligibility and participate in discovery as set forth in the proposed dates and deadlines. The court will grant the motion.

1:20 p.m.

Judge Rhodes is asking the representative from Syncora to file a response to his motion within 14 days. A hearing will be held August 21, 2013 to address the motion.

Representative with the city proposed to Rhodes to have Kevin Orr stand as a witness for the Aug. 21 hearing; Rhodes did not say however if he is going to grant this.

Rhodes said that the hearing will be on August 28 rather than the 21. Court asking the city to file a list of witnesses and list of documents for hearing.

1:40 p.m.

Judge wants to take moment to thank  U.S. court for allowing all to be here on short notice. He asks the courtroom to give Dave Weaver and staff a round of applause in which they did for a few seconds.

Court is adjourned.