U.S. Bankruptcy Court Judge Steven Rhodes, of the Eastern District of Michigan, chastised the City of Detroit’s bankruptcy lawyers for releasing confidential material related to negotiations with the city’s creditors.
The bankruptcy lawyers advised the court that they do have staff that reviews every document that is submitted in the bankruptcy filing, but the staff failed to do their job properly in this instance.
The confidential documents were mailed to about 120 of the city’s bankruptcy creditors.
Detroit — The city’s bankruptcy judge on Monday chastised Detroit’s law firm for inadvertently sharing confidential documents about closed-door negotiations among creditors.
“This is a major problem and needs to be solved,” U.S. Bankruptcy Judge Steven Rhodes told Detroit bankruptcy lawyer Geoff Irwin.
The misstep surfaced early during a hearing in bankruptcy court to resolve discovery disputes between Detroit and its creditors over information to be used at a trial this summer.
Irwin told the judge the Jones Day law firm inadvertently mailed documents to creditors May 6 that involved closed-door mediation negotiations. A team of mediators is overseeing negotiation talks between the city and creditors, including pension funds and unions.
Irwin said about 120 documents were mailed to creditors.
“How did that happen?” Rhodes asked the lawyer.
“Reviewer error,” Irwin said.
“What does that mean?” the judge said.
Jones Day has staff that reviews every document that is sent from the city’s bankruptcy firm. The staff has to review about 1.2 million documents, Irwin said.
The judge weighed in on the effectiveness of Jones Day’s review system.
“It worked when it worked,” the judge said.
“Fair enough,” Irwin said.
Bond insurer Assured Guaranty Municipal Corp. wants the city to be forced to return all of the confidential documents. Rhodes wants the parties to come up with a solution today.
From The Detroit News: http://www.detroitnews.com/article/20140512/METRO01/305120078#ixzz31WsWeKNY
