Mediator Chosen for Detroit’s Chapter 9

A mediator has been appointed in Detroit’s Chapter 9 bankruptcy case, according to sources. The man in question is U.S. District Court Chief Justice Gerald Rosen. Rosen’s position will be to mediate disputes likely to arise during the settlement of Detroit’s $18 billion in outstanding debts, most notably the pensions owed to retired city workers.

Mediators in Chapter 9 Nothing New

Mediators have been employed in other Chapter 9 filings in the past, according to sources. Notably, the bankruptcy of San Bernadino County, California, was facilitated in some measure by a mediator. A mediator, says a local bankruptcy attorney, can help to resolve disputes between the city and its creditors in order to ease the way during what promises to be a complex bankruptcy proceeding.

Gerald Rosen has served in his current position as Chief Justice of the District Court since his appointment in 2009. Few settlements have been reached thus far between Detroit and its creditors, among them Bank of America and UBS for approximately $340 million in liabilities. Presumably the facilitation of Rosen will help to increase the number of settlements and decrease the number of outstanding creditors.

The biggest battle, according to a local bankruptcy attorney, is expected to be with the city’s many retired city workers who may be faced with pension cuts or who are owed back pay. Whether Rosen’s mediation will serve to help settle this contentious issue remains to be seen, and will take weeks to get sorted out.

Rosen has declared full confidentiality for all mediation cases over which he will preside.

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