U.S. Bankruptcy Judge Steven Rhodes

CHICAGO — The federal judge overseeing Detroit's bankruptcy has ordered mediation to resolve a dispute over the city's legal bills, which have reached $140 million and are climbing.

U.S. Bankruptcy Judge Steven Rhodes Wednesday ordered the city and other parties into mediation over the issue.

The question of the fees charged by the city's Jones Day law firm and a myriad of consultants and analysts came up during the trial on the confirmation plan, raised in part by Detroit Mayor Mike Duggan. Rhodes himself raised the question of the fees during his Nov. 7 ruling approving the confirmation plan, and it came up again in two hearings this week.

Rhodes has said he wants a close examination of the fees and set dates of Dec. 3 and Dec. 4 for mediation on the bills. He also ordered the city's two pension funds to subject their legal fees to the examination.

"I'm going to enter an order which resolves this in an effective and most efficient way that is the least publicly contentious," Rhodes said, according to local reports from the courtroom.

Duggan, meanwhile, is reportedly worried that the fees could end up totaling more than $200 million and threaten the city's ability to implement its bankruptcy exit plan, according to a report in the Detroit Free Press that cited anonymous sources.

Jones Day's tab so far has totaled $53 million.

Separately, Rhodes set a hearing date for Nov. 24 to further discuss the city's exit from bankruptcy, including the possible setting of an official exit date.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.