Detroit has retained Jones Daya firm known for handling restructuring work across the industrial Midwestas it seeks to fight the state of Michigan's decision to impose an emergency financial manager on the Motor City.
Though Jones Day media representatives did not immediately respond to requests for comment about the matter, Detroit communications director Robert Warfield confirmed that the city has hired the firm when contacted Monday by The Am Law Daily. In a prepared statement on the subject provided by Warfield, Mayor Dave Bing said that the "experience of the Jones Day law firm will be a valuable asset as we proceed with our plan for restructuring the City of Detroit."
The Detroit City Council, which has not always gone along with Bing's plans, must still approve Jones Day's hiring. The council threw the city's finances into disarray and put Detroit on the road to a state-managed municipal bankruptcy late last year when it initially rejected a $300,000 legal services contract for Miller, Canfield, Paddock and Stone. (The contract for Miller Canfield, which serves as the city's bond counsel, was eventually approved in December.)
While the private sectorincluding a resurgent auto industry that itself has benefited from Jones Day's restructuring expertiseis booming, Detroit's own fiscal condition is so dire that the city is teetering on the brink of insolvency. Michigan Governor Rick Snyder has responded by moving to seize control of the municipal coffers via the imposition of an emergency manager.
Bing opposed the installation of an outside manager, but has agreed to work with a manager in lieu of being completely sidelined. Whether Jones Day can help Detroit in that effort has yet to be determined, although Reuters reports that history is not on the city's side as it seeks to avoid a state takeover. Detroit is facing a long-term debt load of about $14 billion.
As it happens, the city's hire of Jones Day came the same day that former Detroit mayorand disbarred attorneyKwame Kilpatrick was convicted of racketeering and corruption charges following a five-month trial.
Below are some of the latest significant bankruptcy filings to emerge in recent weeks and their lawyers of note. As usual, hourly billing rates are also listed (in parentheses) where available.
Two years after private equity firm Golden Gate Capital bought Conexant Systems for $184 million, the semiconductor manufacturer filed for bankruptcy in Delaware on February 28. Reuters reports that an entity controlled by the hedge fund headed by billionaire George Soros will exchange about $195 million in secured debt into equity in the reorganized company through its prepackaged Chapter 11 proceedings.
Kirkland & Ellis restructuring partners Paul Basta ($1,045) and Joshua Sussberg ($815) in New York and litigation partner Stephen Hackney in Chicago are representing Newport Beach, Californiabased Conexant in its bankruptcy case. Court filings by the firm show that partners are billing between $655 and $1,150 per hour, of counsel between $450 and $1,150, and associates at rates ranging from $430 to $790. Conexant has paid Kirkland a $1 million retainer for its services, according to court records, including an engagement letter between the company and the firm signed in January.
Bankruptcy partner Domenic Pacitti and of counsel Michael Yurkewicz from Delaware's Klehr Harrison Harvey Branzburg are serving as local counsel to the debtor. The firm has not yet filed billing statements with the bankruptcy court.