The City of Detroit will take ballots from retirees who are affected by the city’s bankruptcy to determine whether or not the group agrees to the plan as proposed.
The city’s bankruptcy lawyers are not taking any chances with the ballots, and have contracted for an outside party to tabulate the votes.
Some bankruptcy claimants have voiced concerns about this process.
When thousands of Detroit workers and retirees make the crucial decision in the coming weeks whether to accept the city’s plan to cut retirement benefits, they must mail their ballots to a company in California hired to count their votes.
Using a “balloting agent” to count votes is not unusual in bankruptcy cases. But some city workers and retirees — accustomed to political and union elections — have questioned why their votes are being tabulated in California by a company called Kurtzman Carson Consultants (KCC) and why emergency manager Kevyn Orr seems to have access to the results as the company receives ballots.
Orr spokesman Bill Nowling said that any of the city’s creditors who are involved in the bankruptcy case’s confidential mediation sessions have been given information so far on the progress of voting, including tabulations.
“People should be careful not to compare this to a political election,” Nowling said. “This is a proxy ballot, a shareholder ballot, for lack of a better term. It’s governed by the rules of the court, not the company. KCC is just the company that administers it.”
The city hired KCC in June 2013, about three weeks before it filed for bankruptcy to get relief from about $18 billion in debts and long-term liabilities.
KCC, based in El Segundo, Calif., charged the city $642,004 for its work and expenses from July 18 — when the city filed for bankruptcy — through the end of last year, according to reports filed in bankruptcy court that detail the city’s professional fees related to its Chapter 9 case.
In addition to its responsibilities to process the ballots, KCC’s duties include maintaining a public website with information about Detroit’s bankruptcy case — www.kccllc.net/Detroit — setting up and staffing a call center and communicating with creditors; maintaining a list of creditors, and handling mailings related to the case.
Nowling said KCC is among a small number of companies capable of that sort of work and can handle cases the size of Detroit’s bankruptcy. The company’s website lists more than 400 past and current clients.
Now, the company is tabulating votes for the City of Detroit as retirees send them in from across the country and from each of Michigan’s 83 counties. There are 19 separate classes of creditors in Detroit’s bankruptcy, some with tens of thousands of individual members.
A spokeswoman for KCC said the company does not comment on the Detroit case.
The ballots ask City of Detroit workers and retirees to approve or reject the city’s restructuring plan to shed debt, including a proposal to cut pension benefits. Members of the General Retirement System are facing a 4.5% cut in monthly pension checks and, for some of those members, a clawback of money in annuity savings accounts. Monthly pension checks would not be cut for members of the Police and Fire Retirement System, but their cost of living adjustments would be reduced by about 55%. Many retirees also have a second ballot to vote on health care cuts.
Detroit Free Press: http://www.freep.com/article/20140629/NEWS01/306290058/KCC-Detroit-bankruptcy-balloting
