Reuters: Bankruptcy News: Bankruptcy judge to consider opening secret Detroit 'data room'

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Bankruptcy judge to consider opening secret Detroit 'data room' Aug 21st 2013, 17:51 By Bernie Woodall and Joseph Lichterman DETROIT | Wed Aug 21, 2013 1:51pm EDT DETROIT Aug 21 (Reuters) - The city of Detroit may have to open its digital vault of financial information that includes what the city's fiscal future could look like. U.S. bankruptcy judge Steven Rhodes will hold a hearing at 3 p.m. ET on Wednesday to allow attorneys for the city to argue why a digital "data room" should be kept from the public. The city, under Emergency Manager Kevyn Orr, set up and provided the content for the password-protected data room and allowed access to creditors involved in the historic Detroit bankruptcy filing only if they signed a nondisclosure agreement. Creditors and Orr's office have not revealed what the data consists of. While it was not intended to be seen by the public, representatives from the city's unions and pension funds as well as corporate creditors have been given the password after agreeing to the nondisclosure agreement. At a hearing earlier on Wednesday, Rhodes seemed to take umbrage when Gregory Shumaker, attorney for the Jones Day law firm that is representing the city in the bankruptcy filing, said some of the financial information in the so-called room was not relevant to the Chapter 9 filing. "This is bankruptcy. What is not relevant?" said Rhodes. Shumaker seemed taken aback. There are scenarios of what may happen to the city's finances in the future that are best kept private, he said. "What would be the harm to the city's interest?" countered Rhodes. The judge said he would give Jones Day until the afternoon to come up with a coherent argument on why the data room should remain closed to all but those who agree not to disclose its contents. On July 10, eight days before Detroit filed for the largest municipal bankruptcy in U.S. history, a United Auto Workers attorney, Michael Nicholson, refused to sign the nondisclosure agreement that covered the data as well as discussions held that day in a meeting with Jones Day representatives regarding the city's pensioners. Nicholson told Rhodes in court Wednesday that he was pleased to see a hearing had been set on the information. The question of opening the data room was tacked on to the 3 p.m. session by Rhodes. He initially set the afternoon hearing to hear from the city and Syncora Guarantee, the bond insurer that is contesting a creditor agreement Detroit is asking the court to approve. That agreement involves interest-rate swaps related to Detroit pension debt that Syncora insures. Detroit sued Syncora in July after it allegedly told U.S. Bank, which controls the flow of casino funds that were part of a previous agreement with the swap counterparties, not to release up to $11 million a month to Detroit. Questions regarding information in the data room by Syncora's attorney, Stephen Hackney, led to Rhodes' questioning why the information should be kept confidential. Link this Share this Digg this Email Reprints

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