Detroit Judge Approves Fees, Praises City's Bankruptcy Attorneys

CHICAGO — U.S. Bankruptcy Judge Steven Rhodes has approved $183 million of fees charged by professionals during the city's bankruptcy, in a ruling that heaps praise on the attorneys and consultants who worked on the city's behalf.

The judge's opinion is one of the last remaining aspects of the high-profile Chapter 9 case.

Rhodes approved the city's bankruptcy exit plan in December 2014, but ordered all attorneys and other professionals who worked for the city into mediation to try to agree to discounts. The firms then defended their final fees in court filings throughout January.

The final tab came to $183 million, which came down to $178 million once the state of Michigan reimbursed the city for $5.3 million.

All of the firms agreed to discounts of varying degrees. Jones Day, the city's lead law firm, had a final tab of $58 million, the highest of all firms. Miller Buckfire, the city's investment bankers, charged $23 million. Ernst & Young's fee totaled $20 million; Conway MacKenzie, the city's turnaround and restructuring advisors, charged $17 million.

In his 48-page ruling Rhodes said the finding reflects numerous complex issues in the case and the final consensual agreements crafted largely in court-ordered mediation.

"In its eligibility opinion near the beginning of the case, the court made detailed, and frankly, depressing findings about the city's fiscal and service delivery insolvency," Rhodes wrote in the ruling.

"Those findings reflected the awesome challenges that the professionals in the case faced, embraced, met and overcame. They understood from the beginning the profound personal stake that each of the 700,000 residents of the city of Detroit had in the outcome of their work," he said. "But now is the time to appreciate and credit that accomplishment and all of the effort and skill of those professionals in achieving it. The city is now on a path to success precisely because of all the professionals in the case, including most certainly those whose fees are subject to review in this opinion."

Much of the ruling consists of a list of the motions, objections and appeals filed in the case - numbering in the thousands - that attorneys and Rhodes sifted through.

The judge ended the ruling by singling out for praise Jones Day, calling its work a "singular and extraordinary contribution."