Detroit— The city’s largest union demanded a comprehensive list of text messages, emails and documents Friday that could strengthen its bid to kick Detroit out of bankruptcy court. A Minneapolis Bankruptcy Lawyer was very interested in the request.
The American Federation of State, County & Municipal Employees filed a request in federal bankruptcy court for copies of emails, text messages and other communication sent among Gov. Rick Snyder, Emergency Manager Kevyn Orr and others.
Separately, the union disclosed Friday it served subpoenas on 26 people, including Snyder, Orr, Mayor Dave Bing, state Treasurer Andy Dillon, members of the governor’s staff and several bankruptcy consultants. The subpoenas compel the people to sit for depositions next month in connection with the bankruptcy case.
The documents and depositions could shed light on Snyder’s green-lighting the biggest municipal bankruptcy in U.S. history and bolster the union’s objection to Detroit getting bankruptcy relief if lawyers find evidence the city negotiated in bad faith with creditors, said Douglas Bernstein, a Bloomfield Hills attorney and expert on municipal bankruptcy.
“My suspicion is this is the way they are going to support their challenge,” Bernstein said.
Sara Wurfel, spokeswoman for Gov. Rick Snyder, on Friday defended Orr’s actions, saying Orr clearly outlined why bankruptcy was the only option for the city.
“We remain fully confident in the constitutionality and legality of all related actions,” Wurfel said.
The request came two days after U.S. Bankruptcy Judge Steven Rhodes questioned why the city was being so secretive about giving creditors and the public access to financial projections while Detroit is trying to prove it is insolvent. The union’s request was the most far-reaching among several filed by creditors Friday, including the city’s pension funds.
In response, the city said Friday it would no longer require creditors to sign non-disclosure agreements before accessing a digital data room containing the city’s financial information and other documents.
Creditors also will no longer have to sign non-disclosure agreements to review materials compiled by Milliman, the consulting firm performing actuarial analysis of the city’s pension programs.
"Kevyn Orr's letter to the Governor, and the Governor's response authorizing the bankruptcy, clearly outlined why bankruptcy was the only viable option left to resolve the fiscal crisis in the City of Detroit. We remain fully confident in the constitutionality and legality of all related actions."
The union wants all communication involving Orr’s appointment, a list of consultants hired to work on the bankruptcy and, among other things, a tally of city debts, including any owed by the Mike Ilitch-owned Olympia Entertainment. The company leases Joe Louis Arena, home of the Detroit Red Wings.
Bernstein expects the city will turn over some documents and object to certain requests. Any dispute could be resolved by mediators. A Chicago Car Accident Lawyer was unsure of the possible outcome.
The request Friday came four days after the union objected to Detroit’s eligibility for relief from its creditors. The union claimed Detroit is not insolvent and said Orr failed to negotiate in good faith with creditors before filing bankruptcy July 18.
The union wants the documents by Sept. 13 and to depose a city official Sept. 16. “I haven’t seen it, but it is one of those things that we are going to respond to in court,” Orr spokesman Bill Nowling said Friday.
The city filed its own request Friday, demanding documents from the actuary firm, Gabriel, Roeder, Smith & Co., that calculated the financial health of the city’s pension funds. Orr has said he wants to pare an estimated $3.5 billion in pension debt — a figure the city’s pension funds dispute as overinflated by at least $2 billion.
Spokespeople for the union and Snyder could not be reached for comment Friday.
Rhodes is giving the city until Sept. 6 to respond to objections in advance of an Oct. 23 trial on Detroit’s eligibility for bankruptcy that could last weeks as the judge sorts through objections from numerous creditors with competing agendas.
The union’s top priority is obtaining any proposals made by Orr regarding retiree benefits and pensions, according to the court filing.
The union also wants communications regarding the city’s eligibility to file Chapter 9 bankruptcy and details about Orr requesting permission to file from the governor.
The request includes any communication about Snyder granting permission and the union wants to know how early the governor considered approving a bankruptcy request. AFSCME wants text messages and emails sent among Snyder and staffers, including Chief of Staff Dennis Muchmore and Transformation Manager Richard Baird.
Other requests include:
- All correspondence regarding the city’s eligibility to file for Chapter 9 protection.
- Communications involving the value of city assets.
- A list of city debts, including any owed by Olympia Entertainment or debts involving the lease of Joe Louis Arena and Cobo Center.
- A list of each tax abatement or reduction offered to city taxpayers since 2011.
- A list of city assets worth $50,000 or more, including items owned by the Detroit Institute of Arts. The city has hired Christie’s Appraisals, the New York-based international auction house, to appraise part of the DIA collection, which could be sold to satisfy debts.
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