Snyder lauds judge’s involvement in Detroit financial crisis

Rhodes planned to retire as a full-time judge at the end of 2013, and converted to “senior status” December of that year. However, when Detroit filed for bankruptcy in July 2013, he took on the case, declining the option of reducing the caseload his status allowed him. Snyder credits Rhodes in part with the city’s working recovery.

Sue Snyder, Michigan’s first lady, accompanied the governor to the breakfast. Ann Arbor Mayor Christopher Taylor and Judge Jerry Rosen were among other notable attendees.

During his speech, Snyder said the Detroit bankruptcy was not constructed by one individual or administration, but has been an ongoing problem.

“For decades, Detroit had been declining. We all know that. The issue is we didn’t do much about it; we just watched the decline happen. You can go back to the ’50s or ’60s and argue about when it started, but it had been going on for decades,” Snyder said.

Snyder also thanked Rhodes for his continued work as presiding judge in the bankruptcy case and challenged attendees to consider how the conversation about Detroit has changed in the past five years.

“Five years ago I can tell you how your discussion normally went. Who complained first would be the biggest question; who would bring up something negative first?” Snyder said. “Today you can have a discussion about Detroit, and I hope its happening everyday. When you talk to somebody about Detroit, they’re going to mention something cool going on — something exciting going on — that’s the future.”

Before ending his speech, Snyder reiterated his faith in appointing Rhodes as the judge presiding over the bankruptcy case.

“From day one, I thought we found the right person,” Snyder said, “I was tremendously excited because he set the tone from day one that this was going to get done, and this was going to get done the right way. It was going to get done with leadership from the bench.”

During his speech, Rhodes reflected on the negative sentiment in the city after an emergency manager was appointed.

Rhodes facilitated the “grand bargain”, the bankruptcy plan that reduced Detroit’s $18 billion debt by $7 billion. The plan also strengthened the city’s credit rating while containing a 10-year $1.7 billion investment.

Rhodes thanked Judge Gerald Rosen, who mediated the bankruptcy case, for helping to ensure the bulk of creditors were satisfied with the outcome.

“In the end almost every creditor class cast their ballots in support of the plan,” Rhodes said. “Judge Rosen deserves the credit for that.”

During the Q&A portion of the breakfast, Rhodes said general unsecured creditors were among the unsatisfied minority who were paid 10 percent of the plan, along with advocates of the water rights issue whose appeal is still pending.

Rhodes identified four areas as essential to the success and timeliness of the grand bargain.

“Here are the four keys to how we got to the end in 17 months,” Rhodes said, “strong judicial management, persistence and innovative mediation, really good lawyering and a widespread belief in the city’s mission.”

Throughout the course of the litigation, Rhodes said his philosophy of “always be closing” was borrowed from the movie “Glengarry Glen Ross,” and he applied it to the Detroit bankruptcy case. In every case management order, he tried to choose the route that would not generate further delay. The only exception to this, he said, was when the mediator advised him to postpone the process because it would in the end expedite the process.

Rhodes said through taking the case, he recognized the city’s goal to help those in need.

“I have come to believe that a big reason this happened was because the mission of the city of Detroit is to help people … I believe this basic mission to help people is what compelled the city’s creditors, the state of Michigan and the foundation to help this city. To help the city was to help the people of the city who desperately needed it.”

Another aspect he said he later came to realize was the emotional strain of the bankruptcy case.

“The single most persistent challenge in the Detroit case was, for me, the fact that the case was as much a political case as it was a legal case,” Rhodes said. “What made it a political case was that everyone in Detroit, and in the state of Michigan, had a personal and direct stake in the outcome of the case.”

Rhodes also said he realized the personal stake that many Michigan state residents had in the case, as demonstrated by the amount of people who showed up to the open proceedings. He said during the eligibility portion of the trial, when he opened up the floor, 93 unrepresented parties filed objections — 45 of whom appeared in court on a separate date created to specifically address their concerns. The unrepresented parties filed 836 timely objections in the confirmation phase — 79 of these individuals appeared in court on another separate court date.

Rhodes said the issues of people’s pensions, the water shut off lawsuit and the potential sale of Detroit Institute of Art were emotionally straining. In regards to the latter, Rhodes said he did not see legal reason for the creditors to be given money from the art sales, and that personally, he saw cultural value in the museum. The DIA is considered the sixth-best art museum in the country and is potentially worth more than $1 billion, according to Rhodes.

“The DIA stands at the center of the city as an invaluable beacon of culture, education, for both its children and its adults,” Rhodes said. “To sell the DIA art would be to forfeit Detroit’s future.”

In his closing statements, Rhodes provided additional advice about how to improve Detroit.

Thanking Snyder’s initiatives on this issue, Rhodes said Detroit schools need to be fixed if the city wants to attract families to the area. He also advised Detroit residents to elect officials who support the current revitalization plan, as its process will last a longer term than that of the officials currently in office.