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Lawyers and consultants made quite a handsome profit from the misery of Detroit's historical bankruptcy. In fact, there were even reports of some legal fees running as much as $1,000 an hour.
Now, Matt Helms of the Detroit Free Press reports that Mayor Mike Duggan is alarmed about the amount of fees Detroit will have to pay these folks, and is concerned the total may approach $200 million and put at risk the city's ability to meet terms of its bankruptcy exit plan.
City "people familiar with the mayor and the bankruptcy issue," writes that the issue surfaced Monday when Detroit's second-ranking city attorney told U.S. Bankruptcy Judge Steven Rhodes that Detroit wanted more time to review fees charged by the city's bankruptcy law firm, Jones Day, and other firms providing financial and restructuring advice to the city.
Helms writes:
Rhodes bristled at the suggestion, saying he had already approved the plan of adjustment, the city's post-bankruptcy blueprint for Detroit's financial recovery and restructuring of city government, the Friday before. He suggested city lawyer, Charles Raimi, was "grandstanding" in court.
Three people familiar with Duggan's views on the fees told the Free Press that the mayor believes the total fees could climb close to $200 million, an amount he worries could jeopardize the city's ability to meet the bankruptcy's financial terms. That compares to the roughly $100 million that many bankruptcy experts predicted would be the cost when Detroit filed for the nation's largest-ever municipal bankruptcy in July 2013.
Bill Nowling, a spokesman for emergency manager Kevyn Orr, told the Freep that he thinks the fees won't reach $200 million, and dismissed concerns the fees would harm the city's finances or its ability to stay on track financially.
"It's accounted for in the plan of adjustment," Nowling said. "They're entitled to their opinion on this. The trial is over, so the only fees that are left are the fees incurred in November, and any fees incurred in implementing the plan. I just think it's without merit to suggest the fees are going to reach $200 million."
