Judge Steven Rhodes put off a decision on the matter last week
after he was made aware of a potential conflict of interest centered
around law firm Miller Canfield, which represents Detroit on certain
bankruptcy matters as well as the Public Lighting Authority, created
by a bill passed by the Michigan Legislature late last year.
The city and the authority did not see the dual representation as a
conflict, but the authority said in a brief filed with the court
this week that another firm, The Allen Law Group, was its primary
legal counsel. Miller Canfield, it said, only represents the
lighting authority on bond issues.
Detroit's plan is to use $12.5 million in annual utility tax revenue
to back $153 million of bonds that will be issued by the Public
Lighting Authority through a Michigan agency to finance improvements
to the city's dilapidated public lighting infrastructure.
Kevyn Orr, the city's emergency manager who filed the historic
bankruptcy in July, has said one of his top priorities is to improve
Detroit city services. About 40 percent of street lights in the city
do not work.
The authority also plans to secure a short-term $60 million loan
before the bonds are sold.
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Some Detroit bond holders, bond insurers, unions and retirees
objected to the transaction, arguing that the deal will leave the
city with less cash to pay its creditors.
Rhodes on Tuesday formally declared Detroit bankrupt.
(Reporting by Joseph Lichterman; editing by Mohammad Zargham)
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