DETROIT (WXYZ) - Opening statements in Detroit's Chapter 9 Bankruptcy trial are underway.
7 Action News investigator Jim Kiertzner was live in federal court, blogging today's developments.
You can read his updates below.
Judge Rhodes at the end of two hours of opening from Syncora attorney Keiselstein wanted to know what it would take to settle.
"I want a percentage and I want it now," Judge Rhodes demanded-- 75% was the answer. Judge Rhodes wanted to know where the city would come up with the money. Keiselstein said, sell the art, city tax revenue and success sharing. In other words, when the city gets back on its feet, it pays creditors down the road, as it has planned to do with pension cuts in 2023.
Keiselstein also showed the Judge how the DIA in 1926 had a policy that donations made were without restriction, saying "there's no credible evidence the art can't be sold."
The court is taking a break until 3:20.
Keiselstein tells Judge Rhodes that the city "has dropped a big mess on your doorstep" and that the city has done "very little work, a lot of talk."
He played 3 video clips of Kevyn Orr, Ken Buckfire and a 3rd expert consultant working for the city that they have not done any dismissal analysis of what creditors would get if the bankruptcy case is dismissed from court. That includes any possible sale of art at the Detroit Institute of Arts, any additional tax revenue or any other un-tapped revenue for the city that could be used to pay creditors.
Keiselstein also pointed out to the Judge that Jones Day attorneys had written in the Stockton, California bankruptcy case that a dismissal analysis should be done, a best interests test for creditors.
The debtor's or city's case is a "fiasco" Keiselstein told the Judge. He also said the city took every shortcut possible and is now throwing itself on the mercy of the court. Keiselstein suggests some creditors would do better with a dismissal that what is being offered to them, 10 cents on the dollar in the Plan of Adjustment.
The afternoon session was delayed for 10 minutes while an audio issue was fixed in the courtroom feed to the media room. Marc Keiselstein for Syncora is continuing his opening statement.
He is outlining objections to Detroit's Plan of Adjustment - that it does not pass the test of best interests for creditors. In other words, it is not fair and equitable. Syncora and Financial Guarantee Insurance Corp. are the two main objectors to Detroit in this trial.
Keiselstein says the art collection was pulled off the table for "a relative song". And the Plan put together by Emergency manager Kevyn Orr and consultant Ken Buckfire is not fair and equitable.
"There is no gospel according to Mr Buckire and Mr Orr," Keiselstein told the Judge.
The full court press has started against Detroit's Plan of Adjustment. It is coming from Marc Keiselstein, an attorney for Wall Street Bond Insurer Syncora.
He says these are important days for the history of Detroit and the US Bankruptcy Code. The Detroit Plan is flawed in its structure and would bring serious mayhem to the rule of law.
"The Plan can not be confirmed," Keiselstein told Judge Rhodes. And he says the city gave themselves a hall pass to develop basic evidence for this trial.
Attorney Arthur O'Reilley for the Detroit Institute of Arts in an opening statement is telling Judge Rhodes that several families, including the Ford family, have given their family treasures to the museum for the enjoyment of culture by the community.
60,000 pieces of art have been donated over the decades.
O'Reilley says Detroit without the museum is "unimaginable" and if the settlement that includes the Grand Bargain is rejected by the Judge, the DIA will fight any sale of art.
Sam Alberts, an attorney for the Official Committee of Retirees, is now doing an opening statement and says the committee supports Detroit's Plan of Adjustment. That was seen in the retirees' voting on the plan that happened earlier this summer.
Alberts says without the Grand Bargain, cuts would have been harmful to 23,000 retirees.
Bennett concluded by saying the evidence will show and history will know that Governor Snyder was right by saying Detroit's bankruptcy was not the lowest point but the beginning of its recovery.
"Detroit has earned this court's help," Bennett said.
The court is in recess until 10:20 when others will give their opening statements.
Bennett sounds like he might be wrapping up what is about 3 hours of an opening statement, spread across yesterday and today.
He says that the Detroit Plan of Adjustment is proposed in good faith, settlements are reasonable and discrimination is not unfair to unsecured creditors.
"The city did what its
supposed to do" Bennett told the Judge. The amounts are on the low end of reasonableness.
The Plan is to resolve the city's current condition. Feasibility is a factual determination. That the city can meet its payment obligations and provide city services. Bennett is obviously from out of town, he just pronounced Mayor Mike Duggan's name as DUGAN or DOO-GAN.
Bennett continued that Detroit employees and retirees deserve a better deal for a better workforce and better morale, that unsecured creditors have no right to any money from the Grand Bargain and that there have been enormous efforts by all sides to settle and not find out if pension cuts would be overturned by the 6th Circuit Court of Appeals in Cincinnati.
Opening statements are continuing in Detroit's historic bankruptcy trial on confirmation of the Plan of Adjustment.
Bruce Bennett with Jones Day is speaking to Judge Steven Rhodes for the city. He says dismissal of the case would create chaos and bring a disastrous financial future for Detroit - with no money to improve city services.
He also said it would bring a race to the courthouse for creditors to get their money.
Bennett is also discussing in great detail how the city calculated pension cuts for 23,000 retirees and 10,000 active Detroit city employees.
Later today, objectors to the Plan of Adjustment will give their opening statements - including Syncora Guarantee and Financial Guarantee, two bond insurers who stand to lose hundreds of millions of dollars in Detroit's bankruptcy.
Judge Rhodes has given both sides two weeks to present their case at trial.