Detroit attorney questions city's own bankruptcy fees

DETROIT — A hearing Monday, which was to pin down the date Detroit residents get their city back, focused on the city's legal fees.

An attorney for Detroit questioned the legal fees in the city's bankruptcy case, irking Judge Steven Rhodes.

Rhodes had scheduled Monday's hearing as he prepares to sign the document that officially authorizes Detroit's exit from Chapter 9 bankruptcy.

Charles Raimi, deputy corporation counsel for Detroit, who was not involved in the bankruptcy, appeared at a hearing Monday to request more time to review the legal fees that the city accumulated during the case.

"We have very serious and sound reasons for questioning the fees," said Raimi.

The city, in a sense, is questioning its own legal and consulting fees, which have already topped more than $140 million.

In Detroit, the corporation counsel's office represents the interests of the mayor and City Council.

But Raimi's standing at the hearing appears to be dubious. Detroit emergency manager Kevyn Orr controls the bankruptcy through its completion, under a transition agreement in which he handed over operations of the city to Mayor Mike Duggan and the City Council in September.

"Here we have two different lawyers for the city of Detroit taking opposite views," said Rhodes. "How do I possibly recognize that?"

Rhodes, who on Friday approved the city's sweeping restructuring plan as feasible and fair, went further.

"Why would you be arguing about the infeasibility of this plan except for some kind of political grandstanding?"

"Oh my goodness, your honor," Raimi responded. "I have never grandstanded for any purpose."

Rhodes retorted: "Well, good. I'm glad it's not going to happen again."

Rhodes wants the city and creditors to participate in mediation over the size of the city's legal fees in the case.

Also Monday, Rhodes ordered the city's two pension funds, called the Detroit Retirement Systems, to subject themselves to review by the city's independent fee examiner.

Detroit bankruptcy attorney Heather Lennox said the city must exit bankruptcy no later than mid-December, but would prefer to do so before Thanksgiving, if possible.

Lawyers had the weekend to determine what still needs to be done to formalize Detroit's exit from bankruptcy protection.

Rhodes wanted lawyers to provide a list of tasks that need to be done, with information on how long they might take, whether there are any legal hurdles requiring rulings — all in an effort to determine the date his final order will take effect. Detroit filed for bankruptcy on July 18, 2013, citing debts and long-term liabilities of $18 billion.

Contributing: Alisa Priddle, Detroit Free Press