The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Detroit:
Bankruptcy Consultants Take Their Pound of Flesh

Jan 5, 2015

Lawyers and financial consultants made out like bandits from the Detroit bankruptcy, charging over 170 million dollars in bankruptcy-related fees to the city of Detroit. That’s as much as 15 per cent of the city’s current annual budget. It’s more than the entire budget for the Department of Public Works or the Fire Department. It comes to twice what the city spends on public lighting, recreation, and general services combined.

The biggest amount was almost 58 million dollars to the law firm Jones Day, which happens to be the former employer of the city’s Emergency Manager, Kevyn Orr. Another 60 million dollars went to banking and consulting firms.

The judge overseeing the bankruptcy, Steven Rhodes, is supposed to rule on the “reasonableness of the fees.” So far, Rhodes basically has given Orr everything he’s asked for.

City retirees who have given up retiree health care coverage and between 4 and 20 percent of their pension payments as part of the “grand bargain” bankruptcy settlement, could spare Rhodes the agonizing decision. The fees are not only unreasonable, they’re OUTRAGEOUS!