Evan Vitale Consulting: Detroit charged more than $170 million in legal, consulting fees for …

Thursday, January 1, 2015

Detroit charged more than $170 million in legal, consulting fees for … – MLive.com

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DETROIT, MI — Lawyers and consulting firms that guided the city through its bankruptcy cases charged more than $170 million in total, according to a court document filed this week.

U.S. Bankruptcy Judge Steven Rhodes in November, when he approved the city’s elaborate plan for cutting about $7 billion from its estimated $18 billion in long-term debt, demanded full disclosure of professional fees incurred over the 16-month case.

(Related: Detroit’s historic 2014: 15 big moments for the Motor City)

That disclosure was filed Tuesday and is available here.

Rhodes also said he intended to review the reasonableness of the fees, and the city and its lawyers and consultants have since engaged in talks to lower some of the fees.

According to the document, Jones Day, the lead law firm that represented the city in the bankruptcy case, was paid the most, nearly $58 million, followed by investment banking firm Miller Buckfire, which charged nearly $29 million and restructuring consultants at Ernst and Young, who charged over $20 million.

Four firms that represented and advised retirees in the case charged the city more than $25 million combined.

Court-appointed mediators who facilitated a series of settlements between the city and its creditors to ultimately resolve the case charged nearly $1 million. Chief U.S. District Judge Gerald Rosen, who led mediation, was not compensated.

The state reimbursed or planned to reimburse the city about $5.29 million for professional fees, bringing the total amount paid from the city’s general fund to $164.91 million.

The city officially exited bankruptcy Dec. 10.

The debt adjustment plan is expected to relieve the city of debt service payments that for decades crippled Detroit’s ability to provide adequate services to residents.

The plan was coupled with a 10-year reinvestment framework that would send $1.7 billion into boosting services over the next decade.

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