Sunday, July 21, 2013 9:39:52 PM
Susan Tompor: Women business owners see reasons to add to payrolls
July 21, 2013 | 1 Comments
Ronia Kruse
By Susan Tompor - Detroit Free Press Personal Finance Columnist
Paula Tompkins
Julia C. Dierker, left and Juliet R. Kavanaugh / Detroit Free Press
Angela Williams, owner of DetailXperts sprays off some steam
while on the top of a parking garage in downtown Detroit
on Wednesday June 26, / Ryan Garza/Detroit Free Press
Think of this as an economic pop-up. A small business here or there starts talking about seeing promising signs of economic light.
And promising signs are pumping up payrolls, as several women business owners in Michigan told me that they once again will begin hiring.
We often focus on what’s happening in autos or real estate when talking about the economic recovery. But women business owners are key to watch when it comes to economic development, as well.
“There are more than 10 million businesses owned by women and growing at a faster rate than any other type of small business,” said Terry Barclay, president and CEO of Inforum and Inforum Center for Leadership in Detroit.
According to the Small Business Administration Office of Advocacy, women-owned businesses account for 28.7% of all businesses nationwide.
A national study early in 2013 indicated that women entrepreneurs were optimistic about the future.
The survey conducted by Web.com Group Inc. and the National Association of Women Business Owners found that about 85% of women business owners surveyed predicted that more women will become entrepreneurs in 2013 than in past years. And 38% planned to invest more in hiring this year than they did in 2012 — a positive sign for the economy.
That trend appears to be continuing in Michigan.
Some women who own businesses in Michigan told me that they do have renewed hope and plans to expand their business and do some hiring. The women business owners I talked with this summer are cautiously optimistic.
The key word to focus on here is optimistic.
Dierker & Associates, a Troy-based law firm that specializes in intellectual property rights, says more companies, including those in the automotive and computer products industries, are once again confident about their business outlook. Companies are more willing to invest in developing new products and that’s creating more work for patent-related legal counsel.
“Now, we’re ramping up again,” said Julia Church Dierker, who started the firm in 2002. Several years ago, the firm had six attorneys when work was plentiful but that was before the economic slump hit hard in 2008-09.
The firm has three attorneys now. But the upswing in the firm’s legal work makes Dierker & Associates more willing to hire maybe one or two attorneys within the coming year.
“We would not be actively trying to add to our professional staff if we were not confident,” Dierker said.
No doubt, small business owners aren’t just hiring to hire. Some new job openings can only be filled by people with very specific qualifications and talents. Many jobs are being created to handle work on clearly defined projects.
Detail Xperts, a Detroit-based steam-cleaning car wash franchise, sees new opportunities after surviving the recession. The company, which has 10 employees now, expects to hire about 50 people for a new operation in downtown Detroit in the next few months.
Angela Williams, who owns Detail Xperts, says keeping contacts open and building name recognition during the downturn created a stronger foundation for building the business now. Contacts and sales calls that Detail Xperts made two or three years ago are finally turning into real work, she said.
The company has auto detail shops and mobile detailing units and cleans automobiles, trucks, motorcycles, boats and even airplanes.
“We stayed in the forefront. We stayed out there,” said Williams, who owns the company with her husband Emmanuel Williams.
Paula Tompkins, CEO and founder of Dearborn-based ChannelNet, said her business has picked up as the financial services and automotive financial services sectors have gained ground. She noted that changes in the digital world favor her business, too.
“Customers are empowered now. They don’t want to hang on” with phone calls to call centers, she said. Instead, consumers are willing to handle many transactions online.
ChannelNet has 100 employees, the bulk in Dearborn, and plans to hire six people in the next few months and at least another 12 within the next year. The company offers web-based connections to retain customers and build business, which includes a platform for managing the auto lease turn-in process online. Clients include BMW Financial Services and Audi Financial Services.
Tompkins founded the privately held company more than 25 years ago in California and opened a Dearborn office in 1996 to be near auto clients. The headquarters was moved to Michigan in 2001. She favors the Michigan workforce, noting that pay packages are 30% higher in California.
“The economy is improving,” she said. But companies also realize that it’s essential to have a brand Web site that’s customer-friendly. The company’s patented software enables consumers to research a purchase, view sales incentives and complete a transaction at a store, through a call center or on their mobile device.
Mark Zandi, chief economist for Moody’s Analytics, predicted that small business hiring should grow slowly, but steadily pick up in the next year or so. Credit is flowing a bit more freely to small business owners, he said, allowing them to expand operations.
Many small businesses are tied into the housing market, he said, so as housing revives, so to should hiring. Think realtors, mortgage companies, landscapers, garden supply retailers and hardware stores, law firms, accountants, home improvement, plumbers and electricians, moving companies and trucking jobs.
“It won’t be a straight line — government cuts and tax increases are hurting — but prospects are better over the next several years,” Zandi said.
Job hunters won’t necessarily find a straight line to a paycheck, either.
The key words to focus on here are training and talent.
Ronia Kruse, president and CEO of OpTech in Troy, said her firm could hire more than 115 people by the end of the year. That’s up from 200 employees now.
The company, which provides information technology and engineering staffing, is looking at expanding into office space in downtown Detroit, as well.
But Kruse says the challenge in hiring will be finding the right people with degrees in math, computer science, engineering and the like. She needs experienced program managers, mechanical engineers and electrical engineers.
“Everybody is hiring the talent to deliver the projects,” Kruse said. Many companies had put projects on hold during the recession, she said, and now need to move forward.
Contact Susan Tompor: 313-222-6823 or stompor@freepress.com
http://www.freep.com/article/20130721/COL07/307210051/hiring-Michigan-women-business-owners-Susan-Tompor
====== .. lawyers don't mind Chapter 9 ..
In Detroit's ruin, law firms see land of new opportunity
By Nick Brown - July 21 | Sun Jul 21, 2013 7:59am EDT
(Reuters) - With more than $18 billion at stake in Detroit's restructuring, big law firms and other advisers are clamoring to represent the city's many creditors - including some advisers not exactly known for municipal work.
The city, which filed the largest-ever U.S. municipal bankruptcy on Thursday, tapped high-priced lawyers from Jones Day, financial advisers from Ernst & Young and restructuring consultants from Conway MacKenzie, court papers show.
For creditors and related parties, there is clearly a lot at stake. That means bondholders, insurers, retirees and others are sure to be accompanied in court by platoons of lawyers.
Detroit owes more than $8 billion in bond debt, and the insurers likely on the hook for those costs have already retained big-name law firms to take their cases.
Federal Guaranty Insurance Co tapped Weil Gotshal & Manges, according to a source close to the matter, who declined to be named because the information was not public as of Saturday. An attorney for Weil declined to comment.
David Dubrow, a lawyer at Arent Fox, confirmed on Saturday that he has been tapped by Ambac Financial Group.
And, according to the court's electronic docket, Syncora hired Kirkland & Ellis, known for its corporate bankruptcy work, while Assured Guaranty retained Winston & Strawn, and National Public Finance Guarantee Corp hired Sidley Austin.
Bond insurers will play a key role in Detroit's case. While a portion of the city's $1.13 billion in general obligation bonds are secured by city assets, about $651 million of it is secured only by the ability to raise taxes. The city's emergency manager, Kevyn Orr, has said he will treat that portion of the debt as an unsecured claim.
That classification, which has been largely untested in federal courts, is likely to be hotly contested and possibly litigated by bondholders or their insurers.
Detroit also owes $5.7 billion in unfunded healthcare and other benefits to retirees, and has asked the judge to form a committee to look out for their interests. The Department of Justice may also appoint a committee of unsecured creditors in the case. Both moves would mean opportunities for professional advisers.
The city needs to negotiate new labor deals with unions, and its pension funds are underfunded by $3.5 billion, providing yet more opportunities for attorneys to advise creditors.
Chapter 9, the section of the bankruptcy code that governs municipal bankruptcies, is attractive for advisers, provided there is money to pay them. Unlike in Chapter 11, where billing is subject to court and regulatory review, Chapter 9 allows bills to stay between the adviser and its client.
In corporate restructurings, creditors, judges and the Justice Department pore over fees line by line, and can raise objections to unnecessary or overpriced items. Over the past few years, the Justice Department has ramped up its policing of high fees and has required bankruptcy lawyers to disclose more.
In municipal bankruptcies, fees could be subject to disclosure under the Freedom of Information Act, but they do not need to be reported publicly in court.
"You're used to being in a world where you have to explain yourself, and suddenly you don't anymore," said a bankruptcy lawyer, who asked not to be named.
The catch is that, unlike in corporate bankruptcies, there is no mechanism under Chapter 9 to make the bankrupt entity pay certain creditors' fees. And corporate bankruptcies are generally more lucrative for advisers because there is often more money to go around.
But with $18.5 billion in debt, Detroit is an outlier among municipal bankruptcies, where advisers see the potential for high fees without the hassle of having to justify them in court.
A NEW FRONTIER
In the past, only a small handful of professionals were known for having expertise in municipal restructuring. But a recent slew of Chapter 9 filings has yielded many new faces, and Detroit's bankruptcy will only continue that trend.
"Every time a case gets bigger, there are new players," said Richard Levin, a partner at Cravath Swaine & Moore who is representing the Detroit Institute of Arts in the restructuring.
Chapter 9 filings are rare, with only about 650 cases filed in the 75 years to 2012, mostly involving small municipal entities like sewer districts. But, the last three years have seen filings by the city of Harrisburg, Pennsylvania, Jefferson County, Alabama and the California cities of Stockton and San Bernardino.
And a concurrent lull in corporate bankruptcies has put strain on big restructuring firms like Weil Gotshal, which last month laid off 170 associates and support staff, driving professionals toward municipal work.
"Chapter 9 is not something I started out doing," said George South, a partner at DLA Piper who has become well-versed in the arena, representing creditor groups in the bankruptcies of both Harrisburg and Jefferson County.
PLENTY OF CONSTITUENCIES
In addition to general obligation bonds, Detroit owes nearly $6 billion in revenue bonds and $1.43 billion in pension certificates. Even though the bond insurers are likely to be the ones on the hook, the bondholders themselves will also "lawyer up."
Subsets of the holders may even band together to form committees if they feel a united front would better serve their interests, providing yet another potential path for advisers.
A number of other large law firms, including Brown Rudnick, Orrick Herrington & Sutcliffe and DLA Piper, are involved in the case or looking for ways in, according to people familiar with the matter.
Even if advisers lose out on big-money clients, Detroit's restructuring calls for a slew of projects and transactions that will require their own armies of professionals.
"There's all kinds of consulting opportunities," said Levin, whose client, the Detroit Institute of Arts museum, is at the center of a dispute over whether the city can sell the museum's art collection.
Orr, the emergency manager, has outlined in court papers his plans to create a new water and sewer management authority, transfer Detroit's Belle Isle Park to the state of Michigan, and restructure Coleman A. Young airport, which has not serviced commercial jets in 13 years but which the city must maintain to keep some federal subsidies.
Each of those moves will require lawyers, consultants and financial advisers to strategize the most cost-efficient execution, said Kenneth Klee, a Chapter 9 expert and bankruptcy lawyer at Klee Tuchin Bogdanoff & Stern.
"Chapter Nines require complete expertise in the area of municipal finance," Klee said. "If you only have bankruptcy expertise, that's not enough."
Eventually, hedge funds and other investment vehicles could find ways into the case, as Orr has stressed the importance of new investment, particularly with respect to the proposed new water and sewer authority, which could finance its operations with new bond issuance.
The case could be a boon for smaller law firms, too.
While large, corporate creditors are apt to tap similarly colossal law firms with whom they have preexisting relationships, smaller or locally-based stakeholders may opt to hire attorneys native to Detroit.
"There are a lot of talented lawyers in Detroit," Levin said. "I would think pensions and unions, for example, might opt for those guys."
http://www.reuters.com/article/2013/07/21/usa-detroit-advisers-idUSL1N0FP1WT20130721
====== .. who will cop it the most? ..
Retirees could bear brunt of Detroit bankruptcy
Factbox
Factbox: Reaction to Detroit's bankruptcy - Fri, Jul 19 2013
http://www.reuters.com/article/2013/07/19/us-usa-detroit-quotes-factbox-idUSBRE96I04C20130719
Related News .. one of ..
Q & A: Governor, emergency manager defend Detroit bankruptcy - Fri, Jul 19 2013
http://www.reuters.com/article/2013/07/20/us-usa-detroit-qa-idUSBRE96J00920130720
By Joseph Lichterman and Deepa Seetharaman
DETROIT, July 19 | Fri Jul 19, 2013 9:45pm EDT
(Reuters) - When Paula Kaczmarek moved to Detroit in 1978 to work for the city's public library system, a guarantee of good retirement benefits was a key sweetener that convinced her to leave her previous job in Boston.
"I basically came here for future security," said Kaczmarek, who retired in 2012, two years earlier than she planned, as the public library was facing potential layoffs.
Kaczmarek is among the more than 20,000 unionized retirees whose pensions and healthcare benefits hang in the balance after Detroit filed the largest municipal bankruptcy .. http://www.reuters.com/finance/deals/bankruptcy?lc=int_mb_1001 .. in U.S. history.
In an interview, Kevyn Orr, Detroit's state-appointed emergency manager, said restructuring the city's crippling legacy costs is critical to Detroit's recovery.
"We can't pay benefits with money that's not there," he said. "It can't be done."
Retirees and labor officials acknowledged that the city's finances were in shambles and they would have to share in the sacrifice to help Detroit recover. But they said some of the significant benefits cuts reportedly proposed by Orr in talks with creditors would have a devastating impact on their lives.
"I do have some compassion for people who are investors in Detroit, naturally, because a lot of my pension income is based on investing," said 63-year-old retired city librarian Ellen Simmons. "But it's hard to have a lot of sympathy when there are 20,000 real people who are not living high on the hog."
Although city retirement benefits are enshrined in Michigan's constitution, there is no clear road map for what will happen in a Chapter 9 bankruptcy .. http://www.reuters.com/finance/deals/bankruptcy?lc=int_mb_1001 , experts said. The question is made more complicated by the fact that it is unclear who has the legal authority to negotiate on behalf of the retirees.
Orr and labor officials have locked horns over how to manage pension and retiree healthcare obligations. Orr was appointed by Michigan Governor Rick Snyder in March to try to resolve the city's financial crisis and tackle its $18.5 billion in long-term debt.
The city lists about $644 million in unfunded pension liabilities, but Orr has said the number is closer to $3.5 billion if "more realistic assumptions" are taken into account. Other unfunded post-employment liabilities, which include retiree healthcare costs, account for $5.7 billion of the city's outstanding debts.
The city of Detroit's two largest unsecured creditors are the city's general retirement fund and the police and fire departments' retirement fund.
In a court filing, Orr said the city intended to create a committee of retired employees to represent those workers.
"The appointment of a retiree committee is adequate representation for these individuals and to facilitate the city's restructuring of its pension and other post-employment benefit liabilities," Orr said in his filing.
Orr faced three separate lawsuits from current and retired workers trying to bar his attempts to file Chapter 9.
The conflict ratcheted up when Detroit filed for bankruptcy in federal court Thursday just minutes before labor lawyers could block those efforts in another state court located 90 miles (145 km) away.
At this point, it's unclear how much of a haircut, if any, the retirees will be forced to take. Still, they're preparing for the worst.
Simmons, who retired in January after working for the public library for more than 30 years, said she might have to go back to work or even move in with one of her children depending on how much is cut from her pension.
"My married kids, do they want mom living with them? They'll be gracious about it, but that's not what any of us want," she said.
http://www.reuters.com/article/2013/07/20/usa-detroit-retirees-idUSL1N0FQ00P20130720
See also:
Good People; Racist People - By Ta-Nehisi Coates .. with video ..
http://investorshub.advfn.com/boards/replies.aspx?msg=85474511
July 21, 2013 | 1 Comments
Ronia Kruse
By Susan Tompor - Detroit Free Press Personal Finance Columnist
Paula Tompkins
Julia C. Dierker, left and Juliet R. Kavanaugh / Detroit Free Press
Angela Williams, owner of DetailXperts sprays off some steam
while on the top of a parking garage in downtown Detroit
on Wednesday June 26, / Ryan Garza/Detroit Free Press
Think of this as an economic pop-up. A small business here or there starts talking about seeing promising signs of economic light.
And promising signs are pumping up payrolls, as several women business owners in Michigan told me that they once again will begin hiring.
We often focus on what’s happening in autos or real estate when talking about the economic recovery. But women business owners are key to watch when it comes to economic development, as well.
“There are more than 10 million businesses owned by women and growing at a faster rate than any other type of small business,” said Terry Barclay, president and CEO of Inforum and Inforum Center for Leadership in Detroit.
According to the Small Business Administration Office of Advocacy, women-owned businesses account for 28.7% of all businesses nationwide.
A national study early in 2013 indicated that women entrepreneurs were optimistic about the future.
The survey conducted by Web.com Group Inc. and the National Association of Women Business Owners found that about 85% of women business owners surveyed predicted that more women will become entrepreneurs in 2013 than in past years. And 38% planned to invest more in hiring this year than they did in 2012 — a positive sign for the economy.
That trend appears to be continuing in Michigan.
Some women who own businesses in Michigan told me that they do have renewed hope and plans to expand their business and do some hiring. The women business owners I talked with this summer are cautiously optimistic.
The key word to focus on here is optimistic.
Dierker & Associates, a Troy-based law firm that specializes in intellectual property rights, says more companies, including those in the automotive and computer products industries, are once again confident about their business outlook. Companies are more willing to invest in developing new products and that’s creating more work for patent-related legal counsel.
“Now, we’re ramping up again,” said Julia Church Dierker, who started the firm in 2002. Several years ago, the firm had six attorneys when work was plentiful but that was before the economic slump hit hard in 2008-09.
The firm has three attorneys now. But the upswing in the firm’s legal work makes Dierker & Associates more willing to hire maybe one or two attorneys within the coming year.
“We would not be actively trying to add to our professional staff if we were not confident,” Dierker said.
No doubt, small business owners aren’t just hiring to hire. Some new job openings can only be filled by people with very specific qualifications and talents. Many jobs are being created to handle work on clearly defined projects.
Detail Xperts, a Detroit-based steam-cleaning car wash franchise, sees new opportunities after surviving the recession. The company, which has 10 employees now, expects to hire about 50 people for a new operation in downtown Detroit in the next few months.
Angela Williams, who owns Detail Xperts, says keeping contacts open and building name recognition during the downturn created a stronger foundation for building the business now. Contacts and sales calls that Detail Xperts made two or three years ago are finally turning into real work, she said.
The company has auto detail shops and mobile detailing units and cleans automobiles, trucks, motorcycles, boats and even airplanes.
“We stayed in the forefront. We stayed out there,” said Williams, who owns the company with her husband Emmanuel Williams.
Paula Tompkins, CEO and founder of Dearborn-based ChannelNet, said her business has picked up as the financial services and automotive financial services sectors have gained ground. She noted that changes in the digital world favor her business, too.
“Customers are empowered now. They don’t want to hang on” with phone calls to call centers, she said. Instead, consumers are willing to handle many transactions online.
ChannelNet has 100 employees, the bulk in Dearborn, and plans to hire six people in the next few months and at least another 12 within the next year. The company offers web-based connections to retain customers and build business, which includes a platform for managing the auto lease turn-in process online. Clients include BMW Financial Services and Audi Financial Services.
Tompkins founded the privately held company more than 25 years ago in California and opened a Dearborn office in 1996 to be near auto clients. The headquarters was moved to Michigan in 2001. She favors the Michigan workforce, noting that pay packages are 30% higher in California.
“The economy is improving,” she said. But companies also realize that it’s essential to have a brand Web site that’s customer-friendly. The company’s patented software enables consumers to research a purchase, view sales incentives and complete a transaction at a store, through a call center or on their mobile device.
Mark Zandi, chief economist for Moody’s Analytics, predicted that small business hiring should grow slowly, but steadily pick up in the next year or so. Credit is flowing a bit more freely to small business owners, he said, allowing them to expand operations.
Many small businesses are tied into the housing market, he said, so as housing revives, so to should hiring. Think realtors, mortgage companies, landscapers, garden supply retailers and hardware stores, law firms, accountants, home improvement, plumbers and electricians, moving companies and trucking jobs.
“It won’t be a straight line — government cuts and tax increases are hurting — but prospects are better over the next several years,” Zandi said.
Job hunters won’t necessarily find a straight line to a paycheck, either.
The key words to focus on here are training and talent.
Ronia Kruse, president and CEO of OpTech in Troy, said her firm could hire more than 115 people by the end of the year. That’s up from 200 employees now.
The company, which provides information technology and engineering staffing, is looking at expanding into office space in downtown Detroit, as well.
But Kruse says the challenge in hiring will be finding the right people with degrees in math, computer science, engineering and the like. She needs experienced program managers, mechanical engineers and electrical engineers.
“Everybody is hiring the talent to deliver the projects,” Kruse said. Many companies had put projects on hold during the recession, she said, and now need to move forward.
Contact Susan Tompor: 313-222-6823 or stompor@freepress.com
http://www.freep.com/article/20130721/COL07/307210051/hiring-Michigan-women-business-owners-Susan-Tompor
====== .. lawyers don't mind Chapter 9 ..
In Detroit's ruin, law firms see land of new opportunity
By Nick Brown - July 21 | Sun Jul 21, 2013 7:59am EDT
(Reuters) - With more than $18 billion at stake in Detroit's restructuring, big law firms and other advisers are clamoring to represent the city's many creditors - including some advisers not exactly known for municipal work.
The city, which filed the largest-ever U.S. municipal bankruptcy on Thursday, tapped high-priced lawyers from Jones Day, financial advisers from Ernst & Young and restructuring consultants from Conway MacKenzie, court papers show.
For creditors and related parties, there is clearly a lot at stake. That means bondholders, insurers, retirees and others are sure to be accompanied in court by platoons of lawyers.
Detroit owes more than $8 billion in bond debt, and the insurers likely on the hook for those costs have already retained big-name law firms to take their cases.
Federal Guaranty Insurance Co tapped Weil Gotshal & Manges, according to a source close to the matter, who declined to be named because the information was not public as of Saturday. An attorney for Weil declined to comment.
David Dubrow, a lawyer at Arent Fox, confirmed on Saturday that he has been tapped by Ambac Financial Group.
And, according to the court's electronic docket, Syncora hired Kirkland & Ellis, known for its corporate bankruptcy work, while Assured Guaranty retained Winston & Strawn, and National Public Finance Guarantee Corp hired Sidley Austin.
Bond insurers will play a key role in Detroit's case. While a portion of the city's $1.13 billion in general obligation bonds are secured by city assets, about $651 million of it is secured only by the ability to raise taxes. The city's emergency manager, Kevyn Orr, has said he will treat that portion of the debt as an unsecured claim.
That classification, which has been largely untested in federal courts, is likely to be hotly contested and possibly litigated by bondholders or their insurers.
Detroit also owes $5.7 billion in unfunded healthcare and other benefits to retirees, and has asked the judge to form a committee to look out for their interests. The Department of Justice may also appoint a committee of unsecured creditors in the case. Both moves would mean opportunities for professional advisers.
The city needs to negotiate new labor deals with unions, and its pension funds are underfunded by $3.5 billion, providing yet more opportunities for attorneys to advise creditors.
Chapter 9, the section of the bankruptcy code that governs municipal bankruptcies, is attractive for advisers, provided there is money to pay them. Unlike in Chapter 11, where billing is subject to court and regulatory review, Chapter 9 allows bills to stay between the adviser and its client.
In corporate restructurings, creditors, judges and the Justice Department pore over fees line by line, and can raise objections to unnecessary or overpriced items. Over the past few years, the Justice Department has ramped up its policing of high fees and has required bankruptcy lawyers to disclose more.
In municipal bankruptcies, fees could be subject to disclosure under the Freedom of Information Act, but they do not need to be reported publicly in court.
"You're used to being in a world where you have to explain yourself, and suddenly you don't anymore," said a bankruptcy lawyer, who asked not to be named.
The catch is that, unlike in corporate bankruptcies, there is no mechanism under Chapter 9 to make the bankrupt entity pay certain creditors' fees. And corporate bankruptcies are generally more lucrative for advisers because there is often more money to go around.
But with $18.5 billion in debt, Detroit is an outlier among municipal bankruptcies, where advisers see the potential for high fees without the hassle of having to justify them in court.
A NEW FRONTIER
In the past, only a small handful of professionals were known for having expertise in municipal restructuring. But a recent slew of Chapter 9 filings has yielded many new faces, and Detroit's bankruptcy will only continue that trend.
"Every time a case gets bigger, there are new players," said Richard Levin, a partner at Cravath Swaine & Moore who is representing the Detroit Institute of Arts in the restructuring.
Chapter 9 filings are rare, with only about 650 cases filed in the 75 years to 2012, mostly involving small municipal entities like sewer districts. But, the last three years have seen filings by the city of Harrisburg, Pennsylvania, Jefferson County, Alabama and the California cities of Stockton and San Bernardino.
And a concurrent lull in corporate bankruptcies has put strain on big restructuring firms like Weil Gotshal, which last month laid off 170 associates and support staff, driving professionals toward municipal work.
"Chapter 9 is not something I started out doing," said George South, a partner at DLA Piper who has become well-versed in the arena, representing creditor groups in the bankruptcies of both Harrisburg and Jefferson County.
PLENTY OF CONSTITUENCIES
In addition to general obligation bonds, Detroit owes nearly $6 billion in revenue bonds and $1.43 billion in pension certificates. Even though the bond insurers are likely to be the ones on the hook, the bondholders themselves will also "lawyer up."
Subsets of the holders may even band together to form committees if they feel a united front would better serve their interests, providing yet another potential path for advisers.
A number of other large law firms, including Brown Rudnick, Orrick Herrington & Sutcliffe and DLA Piper, are involved in the case or looking for ways in, according to people familiar with the matter.
Even if advisers lose out on big-money clients, Detroit's restructuring calls for a slew of projects and transactions that will require their own armies of professionals.
"There's all kinds of consulting opportunities," said Levin, whose client, the Detroit Institute of Arts museum, is at the center of a dispute over whether the city can sell the museum's art collection.
Orr, the emergency manager, has outlined in court papers his plans to create a new water and sewer management authority, transfer Detroit's Belle Isle Park to the state of Michigan, and restructure Coleman A. Young airport, which has not serviced commercial jets in 13 years but which the city must maintain to keep some federal subsidies.
Each of those moves will require lawyers, consultants and financial advisers to strategize the most cost-efficient execution, said Kenneth Klee, a Chapter 9 expert and bankruptcy lawyer at Klee Tuchin Bogdanoff & Stern.
"Chapter Nines require complete expertise in the area of municipal finance," Klee said. "If you only have bankruptcy expertise, that's not enough."
Eventually, hedge funds and other investment vehicles could find ways into the case, as Orr has stressed the importance of new investment, particularly with respect to the proposed new water and sewer authority, which could finance its operations with new bond issuance.
The case could be a boon for smaller law firms, too.
While large, corporate creditors are apt to tap similarly colossal law firms with whom they have preexisting relationships, smaller or locally-based stakeholders may opt to hire attorneys native to Detroit.
"There are a lot of talented lawyers in Detroit," Levin said. "I would think pensions and unions, for example, might opt for those guys."
http://www.reuters.com/article/2013/07/21/usa-detroit-advisers-idUSL1N0FP1WT20130721
====== .. who will cop it the most? ..
Retirees could bear brunt of Detroit bankruptcy
Factbox
Factbox: Reaction to Detroit's bankruptcy - Fri, Jul 19 2013
http://www.reuters.com/article/2013/07/19/us-usa-detroit-quotes-factbox-idUSBRE96I04C20130719
Related News .. one of ..
Q & A: Governor, emergency manager defend Detroit bankruptcy - Fri, Jul 19 2013
http://www.reuters.com/article/2013/07/20/us-usa-detroit-qa-idUSBRE96J00920130720
By Joseph Lichterman and Deepa Seetharaman
DETROIT, July 19 | Fri Jul 19, 2013 9:45pm EDT
(Reuters) - When Paula Kaczmarek moved to Detroit in 1978 to work for the city's public library system, a guarantee of good retirement benefits was a key sweetener that convinced her to leave her previous job in Boston.
"I basically came here for future security," said Kaczmarek, who retired in 2012, two years earlier than she planned, as the public library was facing potential layoffs.
Kaczmarek is among the more than 20,000 unionized retirees whose pensions and healthcare benefits hang in the balance after Detroit filed the largest municipal bankruptcy .. http://www.reuters.com/finance/deals/bankruptcy?lc=int_mb_1001 .. in U.S. history.
In an interview, Kevyn Orr, Detroit's state-appointed emergency manager, said restructuring the city's crippling legacy costs is critical to Detroit's recovery.
"We can't pay benefits with money that's not there," he said. "It can't be done."
Retirees and labor officials acknowledged that the city's finances were in shambles and they would have to share in the sacrifice to help Detroit recover. But they said some of the significant benefits cuts reportedly proposed by Orr in talks with creditors would have a devastating impact on their lives.
"I do have some compassion for people who are investors in Detroit, naturally, because a lot of my pension income is based on investing," said 63-year-old retired city librarian Ellen Simmons. "But it's hard to have a lot of sympathy when there are 20,000 real people who are not living high on the hog."
Although city retirement benefits are enshrined in Michigan's constitution, there is no clear road map for what will happen in a Chapter 9 bankruptcy .. http://www.reuters.com/finance/deals/bankruptcy?lc=int_mb_1001 , experts said. The question is made more complicated by the fact that it is unclear who has the legal authority to negotiate on behalf of the retirees.
Orr and labor officials have locked horns over how to manage pension and retiree healthcare obligations. Orr was appointed by Michigan Governor Rick Snyder in March to try to resolve the city's financial crisis and tackle its $18.5 billion in long-term debt.
The city lists about $644 million in unfunded pension liabilities, but Orr has said the number is closer to $3.5 billion if "more realistic assumptions" are taken into account. Other unfunded post-employment liabilities, which include retiree healthcare costs, account for $5.7 billion of the city's outstanding debts.
The city of Detroit's two largest unsecured creditors are the city's general retirement fund and the police and fire departments' retirement fund.
In a court filing, Orr said the city intended to create a committee of retired employees to represent those workers.
"The appointment of a retiree committee is adequate representation for these individuals and to facilitate the city's restructuring of its pension and other post-employment benefit liabilities," Orr said in his filing.
Orr faced three separate lawsuits from current and retired workers trying to bar his attempts to file Chapter 9.
The conflict ratcheted up when Detroit filed for bankruptcy in federal court Thursday just minutes before labor lawyers could block those efforts in another state court located 90 miles (145 km) away.
At this point, it's unclear how much of a haircut, if any, the retirees will be forced to take. Still, they're preparing for the worst.
Simmons, who retired in January after working for the public library for more than 30 years, said she might have to go back to work or even move in with one of her children depending on how much is cut from her pension.
"My married kids, do they want mom living with them? They'll be gracious about it, but that's not what any of us want," she said.
http://www.reuters.com/article/2013/07/20/usa-detroit-retirees-idUSL1N0FQ00P20130720
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