Friday, July 26, 2013

Motor City Mediation?

U.S. Bankruptcy Judge Steven Rhodes, who is overseeing the largest municipal bankruptcy in U.S. history, has proposed appointing a federal district judge as mediator to negotiate the most difficult disputes in trying to resolve some $18 billion in Detroit's bond and pension obligations. Proposed restructuring of obligations sparked outrage from city retirees whose pensions and benefits could be cut drastically. Judge Rhodes tapped Hon. Gerald Rosen, Chief Judge of the U.S. District Court for the Eastern District of Michigan, to oversee any confidential mediation or another mediator of Judge Rosen's choosing. That way, Judge Rosen can mediate disputes or appoint other mediators, with the costs shared by the negotiating parties. Details about the mediation talks would not be disclosed, but any agreements would be made public. Next month, Judge Rhodes will consider deadlines for the city to file its formal plan for repaying its obligations and for rejecting collective bargaining agreements. Bankruptcy judges often utilize mediators as a way to bring together parties in private who might find it difficult to reach a consensus through a more open court process. Judge Rhodes also proposed an order appointing an examiner to review fees to be paid by Detroit. See stories here: and