CHICAGO -- Michigan lawmakers will begin three days of hearings Tuesday on an 11-bill legislative package that outlines the state's role in Detroit's bankruptcy.
Detroit emergency manager Kevyn Orr is set to testify Tuesday morning before the newly created House Committee on Detroit's Recovery and Michigan's Future that is considering the legislation.
The committee will also hold hearings on the bills Wednesday morning and Thursday afternoon.
The bills would, among other things, create a seven-member committee to oversee Detroit for 20 years and authorize a state contribution of $195 million in a one-time lump cash infusion. The money would come from the state's rainy-day fund.
The legislation features a host of requirements for state's largest city, including that it hire a chief financial officer, implement certain pension and health care reforms, and create an investment committee to advise the city's two pension funds. The bills are a key part of Detroit's plan to exit the nation's largest Chapter 9 case by the end of September.
The financial contribution is part of a so-called grand bargain in which Michigan, a group of private foundations, and the city owned Detroit Institute of Arts museum raise $816 million for the city's pension debt.
In return, the DIA would be spun off to an independent nonprofit board that would protect the art collection from any future sale or privatization. Most of the settlements Detroit has reached with its creditors rely on that infusion of cash.
House leaders pledged that the legislation would move quickly. Gov. Rick Snyder wants lawmakers to pass legislation before they break at the end of June.
Also Thursday, U.S. Bankruptcy Judge Steven Rhodes, who is overseeing Detroit's Chapter 9 case, will consider motions from bond insurer Financial Guaranty Insurance Co. and a group of banks who hold $1.4 billion of the city's pension certificate of participation debt to intervene in the lawsuit the city filed seeking to invalidate the certificate debt. FGIC insures the COPs.
The judge will also consider the insurer's request that the city be forced to allow interested bidders to examine art at the Detroit Institute of Arts.
At a hearing Monday, Rhodes granted a request from a newly hired municipal expert to hire her own attorney. Rhodes in April tapped Boston-based restructuring consultant Martha Kopacz of Phoenix Management LLC to act as a muni finance expert to review the feasibility of the city's debt plan.
Kopacz last week asked Rhodes to allow her to hire legal counsel.
"Although my responsibilities run to the court, my work is being provided in the context of a highly contested and controversial dispute," Kopacz wrote. "[T]he process is by its very nature adversarial and discovery and questions of legal process and procedure are outside of my expertise."
The judge granted her request.
Rhodes also blasted the city's Jones Day attorneys for accidently mailing confidential mediation documents to some creditors. About 120 confidential documents were accidently released, according to attorney Geoff Irwin. Bond insurer Assured Guaranty asked Rhodes to order the city to return the documents.
The city began mailing its plan of debt adjustment to 32,000 retirees Monday morning. Retirees have 60 days to vote on the plan.
