Judge selected to hear Detroit Chapter 9 U.S. bankruptcy

Reuters News
Posted: Jul 19, 2013 6:08 PM

By Joseph Lichterman

DETROIT (Reuters) - The chief judge of the U.S. Court of Appeals for the 6th Circuit on Friday selected a 28-year veteran of bankruptcy courts with experience handling municipal restructurings to preside over Detroit's historic bankruptcy.

U.S. Bankruptcy Judge Steven Rhodes is the most experienced bankruptcy judge in Detroit and has a reputation for being tough but fair. He presided over the only previous Chapter 9 filing in the Eastern District of Michigan, according to letters from other judges that were included in the filing.

Rhodes "is very knowledgeable about the relationship of federal bankruptcy law to state constitutional and other state law, which will likely be an important issue in this case," Chief U.S. Bankruptcy Judge Phillip Shefferly wrote in letter dated July 19.

The city of Detroit's Chapter 9 filing on Thursday marked the largest municipal bankruptcy in U.S. history. It comes after decades of neglect that led to the appointment of Kevyn Orr as the city's emergency manager in March.

The sooner-than-expected move triggered outrage from labor officials who were in state court at the time trying to block Michigan Governor Rick Snyder and Orr from filing for bankruptcy. On Friday, the state court judge in Michigan's capital of Lansing ordered Orr to withdraw the bankruptcy petition.

Rhodes was given the case by Alice Batchelder, chief judge for the U.S. Court of Appeals for the 6th Circuit, which is in Cincinnati, Ohio.

Rhodes was slated to retire at the end of the year and was already winding down his case load. But he indicated that he "has the time and is willing to preside over this case for its duration," Shefferly said.

"It makes perfect sense for him to have this because he can devote the time to the case and the attention," said Douglas Bernstein, a managing partner of Plunkett Cooney's bankruptcy practice in suburban Detroit. "And the good thing is, he won't be intimidated by the big case."

(Reporting by Joseph Lichterman; Editing by Gary Hill and Leslie Gevirtz)