Detroit’s was by far the largest municipal bankruptcy ever, commandeering about 100 Jones Day lawyers, who coordinated more than 70 depositions and produced and reviewed millions of documents during its 16-month lifespan.
Although a long, diverse list of parties, ranging from retired city employees to big banks, had claims against the city, only one issue was litigated to conclusion—a dispute about whether, despite a state law that protected them, municipal pension claims could be adjusted through the Chapter 9 process. (The claims could be adjusted, U.S. Bankruptcy Judge Steven Rhodes ruled.) In the end, the parties eliminated $7 billion in municipal debt, negotiated a global settlement on pensions and retiree health care and achieved a so-called Grand Bargain in which the state of Michigan, philanthropies and the Detroit Institute of Arts (DIA) committed $816 million to shore up city pension funds.
