Detroit judge expects ruling on bankruptcy in 2 weeks

DETROIT — U.S. Bankruptcy Judge Steven Rhodes said Monday he expects to issue a ruling on whether to approve Detroit's bankruptcy exit plan late in the week of Nov. 3, pushing the decision past the general election that includes the race for governor of Michigan.

Rhodes also said he expects closing arguments to begin Oct. 27, following two days of final testimony Tuesday and Wednesday, crystallizing the final stages of Detroit's historic Chapter 9 case, the largest ever in U.S. history.
The announcement came after Rhodes dismissed claims by the UAW and the city's largest employee union, the American Federation of State, County and Municipal Employees Council 25.
The union argued last week that it has a claim of up to $174 million dating to a 2011 court decision halting retiree payments known as "13th checks." AFSCME lawyer Richard Mack told Rhodes that the city's bankruptcy plan of adjustment — the blueprint for slashing debts and restructuring city government over the next decade — didn't address 13th check payments that were stopped without regard to labor laws.
City lawyers argued that the plan of adjustment does cover AFSCME's claim, and Rhodes agreed in a ruling he read from the bench earlier Monday.
The city stopped issuing 13th checks after it discovered the practice cost $1.9 billion. The losses contributed to the financial crisis that drove Detroit to bankruptcy.

City lawyer Heather Lennox told Rhodes that the unions and the city reached an agreement in which retirees who work for both the Detroit Public Library and Cobo Center will participate in the city's new health care plan, called a VEBA, or Voluntary Employee Benefit Association. That would add about 330 Detroit Public Library workers and six from Cobo to the plan.

Sam Alberts, a lawyer for the Official Committee of Retirees that represented retiree interests in the case, appeared to have wanted to explain concerns about moving the Cobo and library workers into the health plan, but Rhodes wasn't interested in hearing the argument.
"Really?" Rhodes asked Alberts. "Really, 330 employees out of 10,000? ... I don't want an explanation. I want you to resolve it."
Among those expected to testify Tuesday and Wednesday are Guarav Malhotra, a lead Ernst & Young financial consultant for the city, and Martha Kopacz, the independent expert Rhodes hired to assess the feasibility of Detroit's bankruptcy plan.
Under the federal bankruptcy code, Rhodes must rule on whether the plan is fair to creditors, legal and feasible — meaning it will provide a reasonable framework for the city to remain solvent and improve services in the coming years.