6 February, 19:51

Bankruptcy threatening to bankrupt Detroit even more

Bankruptcy threatening to bankrupt Detroit even more

By Crystal Park

WASHINGTON (VR)—When financially broken Detroit filed for bankruptcy last July, it was hoping to wipe the slate clean, and start again from zero. But even after filing for bankruptcy, the city is finding itself once again over its head with exorbitant fees related to the filing.

For the months between July and September of last year, the tab for lawyers, consultants and other professional fees total $11.4 million dollars. Detroit filed for bankruptcy because it couldn't deal with $18 million in debt and other liabilities.

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The city has appointed a fee examiner to make sure money isn't going to waste. Robert Fishman released his first quarterly report, which details the firms and costs for legal professional services.

Larry Durbin is a professor of law at the University of Detroit's Mercy School of Law. He says, "Here you have a city that is on the verge of not being able to pay its bills, and yet the professionals- although some would say are charging reduced fees- are still charging very, very large fees."

For example, Jones Day law firm is charging $1,000 per hour. It just so happens to be the former law firm that employed Kevyn Orr, who is now the state-appointed emergency manager, tasked with handling the bankruptcy.

Durbin says questions have been raised of a potential conflict of interest. "It's been the subject of interest to many people. I think there are a number of people who feel Mr. Orr should not have been able to use his former law firm where he was a partner."

Durbin stops short of inferring there is corruption. For one, Durbin explains, bankruptcy law is very intricate and thus requires skilled lawyers who are bound to charge a lot of money.

At this rate, will Detroit even be able to pay the fees to achieve bankruptcy?

Durbin says, "Generally the answer would be no, but the counter response is yes, but look what it is achieving- the discharge and the compromise and the lowering of all of the billions of dollars that the city would otherwise owe. So that's the justification of it."

Crystal Park, detroit, bankruptcy, Larry Durbin, Jones Day law firm, Politics
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