Detroit hit with $178 million legal bill two months after emerging from bankruptcy

Just two months after Detroit emerged from the largest municipal bankruptcy in US history, the city has been hit with a massive legal bill.

US Federal Judge Steven Rhodes said on Thursday that the $178 million charged to Detroit by law firms and consultants was a “reasonable” amount, according to a report from Reuters.

Detroit exited bankruptcy on 10 December with a court-approved plan that would allow the city to cut $7 billion off its $18 billion of debt and obligations.

“The city is now on a path to success precisely because of the expertise, skill, commitment, endurance, personal sacrifice, civility and proficiency of all of the professionals in the case, including most certainly those whose fees are subject to review in this opinion”, Judge Rhodes wrote.

The original legal bill was more than $183 million, but the state of Michigan paid more than $5 million to cut the tab to $178 million. Jones Day, the city’s top counsel, charged Detroit $57.9 million.

Several firms, including Jones Day, that were owed money by the city lowered charges to make the bill more palatable for Detroit, reports show.

Despite reductions in the bill, the $178 million owed by Detroit is still nearly 20 per cent of the city’s overall budget for fiscal 2015. The city’s plan to pay off the legal bill was not immediately available.

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