The Wall Street Journal’s Market Watch website has put together a slide show of companies profiting from the City of Detroit’s Bankruptcy filing.
Among them are an auction house, Detroit’s bankruptcy lawyers, the bankruptcy lawyer turned emergency manager Kevyn Orr, and an global bank.
Of note in the article are the large fees taken by many lawyers involved in the bankruptcy.
While Detroit’s bankruptcy offers an opportunity for large law firms to charge high fees, most bankruptcy cases have much lower fee structures.
Most bankruptcies are consumer oriented and lawyer fees are priced to make it affordable on the bankruptcy debtors.
Images of abandoned houses and dark streets in Detroit underscore what it truly means when a city’s coffers run dry. But, paradoxically, as the once-vibrant Motor City winds its way through bankruptcy court, the costs of restructuring are staggeringly high.
Cities restructure through Chapter 9 of the bankruptcy code, which, because of its lack of precedent, can be lengthy and expensive. Given that Detroit is the biggest-ever municipal bankruptcy case with $18 billion in debt, the costs add up. Teams of bankruptcy lawyers and restructuring experts stand to make a hefty profit on the process, but others are poised to gain as well.
Detroit watchers have estimated that the city will have paid over a hundred million dollars by the time it emerges from bankruptcy. Here’s a look at some of those who are benefiting.
Market Watch: http://www.marketwatch.com/story/whos-profiting-from-the-detroit-bankruptcy-2013-11-19
