Speedy Detroit disclosure statement approval process draws objection

By Caroline Salls

Pittsburgh, Feb. 24 - The City of Detroit's motion for approval of disclosure statement procedures drew an objection Monday from several parties, according to a filing with the U.S. Bankruptcy Court for the Eastern District of Michigan.

A hearing on the procedures motion, under which the city asked the court to schedule the disclosure statement hearing and related objection deadlines, is set for Feb. 25.

The objection was filed by Syncora Guarantee Inc. and Syncora Capital Assurance Inc., Hypothekenbank Frankfurt AG, Hypothekenbank Frankfurt International SA, Erste Europaische Pfandbrief- und Kommunalkreditbank AG in Luxemburg SA, FMS Wertmanagement Aor and Michigan Counsel 25 of the American Federation of State, County and Municipal Employees, Sub-Chapter 98, City of Detroit Retirees.

According to the objection, the disclosure statement for Detroit's plan of adjustment "is incomplete by its own terms, failing to attach many, and necessary, non-public materials and documents referenced, incorporated and cited as exhibits."

The objectors said the court can set deadlines for objection to and a hearing for a disclosure statement only 28 days after the city provides the completed document. At that point, the creditors and the court can use the 28-day period to determine whether it complies with the Bankruptcy Code.

Additionally, the objecting parties said the city's proposed schedule precludes the possibility of any meaningful creditor discovery.

"The goal of expeditiously resolving bankruptcy cases does not trump the absolute obligation to provide more than a schematic of a plan," the objection said.

"No consensus has been reached among the city and any key creditor group, and, despite the city's rhetoric about progress being made in negotiations, the mediation process has yet to bear fruit."

The objectors said this is "another by-product of the city's view that stakeholders are on a need-to-know basis only."

The City of Detroit filed for bankruptcy on July 18, 2013. The Chapter 9 case number is 13-53846.

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