Detroit retirees argue in court against bankruptcy plan

• Retired water department worker unexpectedly gets to question Kevyn Orr under oath
• Former Detroit Councilwoman JoAnn Watson testifies against city%27s restructuring plan

Individual Detroit retirees with no legal representation took the place of high-powered lawyers today in the spotlight of the city's historic bankruptcy case.

Federal bankruptcy Judge Steven Rhodes' decision to allow individual objectors to argue against the city's restructuring plan precipitated some unexpected scenes, including one Detroit resident suddenly getting the chance to question emergency manager Kevyn Orr under oath.

Wanda Jan Hill, an activist and retired Detroit worker who ran for city council last year, originally asked to question Jones Day lawyer Heather Lennox about the city's clawback of retirees' annuity savings accounts. But lawyers for the city tried to block Hill's request, saying Lennox likely would be precluded from answering any questions because of her duty to keep private information shielded by attorney-client privileges and a gag order on the case's mediation talks.

So Rhodes called on Orr, who was in the courtroom with other lawyers for the city of Detroit, to see if he could answer Hill's questions about the interest rate tied to the city's annuity fund clawback.

Orr slowly, politely responded in very general terms to a couple of Hill's questions. Apparently sensing a lack of progress, Rhodes jumped in and helped Hill get to the point.

"I think what Ms. Hill is trying to get here is whether or not any of the city's filed documents disclose the 6.75% interest rate associated with the clawback," Rhodes said.

Orr couldn't answer with any specificity, so Rhodes allowed Hill to question Lennox. Hill asked several more questions before Rhodes asked her to wrap up.

Hill, who retired as a water department manager after 30 years with the city, appeared well-prepared for her presentation. But her lack of legal training was evident at times. Rhodes had to remind her not to be argumentative with Lennox. Of Robert Hertzberg, one of the city's lead attorneys, Hill asked, "who is this gentleman?"

Hill, 64, was one of several individuals on Wednesday who got the chance to convince Rhodes why the city's bankruptcy exit plan should be changed or rejected. The objectors included former city councilwoman JoAnn Watson and a retired chemist for the city.

Watson, known on city council for her passionate objection to state intervention into Detroit city government, was brief in making her case. She said the city's plan should not be confirmed because the state shepherded Detroit into bankruptcy while at the same time owing Detroit hundreds of millions of dollars. Watson also said the city council played no role in the decision for Detroit to file for bankruptcy, a move that bypassed democracy.

Others based their arguments against the city's plan on the annuity savings clawback — money some retirees would have to pay back the city for what are considered excessive interest credits paid to them over the previous decade. Hill said the city did not provide retirees with enough information about how the clawback was calculated.

Rhodes' decision to allow individual retirees and others to present their case "added a human touch to the bankruptcy activities," Hill said after Wednesday's hearing.

"I'm just happy that we were able to be heard because nobody can handle our business better than we can," Hill said. "I'm just hoping and praying that we're not going through the motions."

After Hill was through questioning Orr and Lennox, Rhodes asked her why she needed more information about the clawback to vote on the city's proposal when the city detailed to retirees exactly how much the clawback would amount to. A more detailed accounting of the clawback, Hill told Rhodes, could have opened the door for more negotiations between the city and retirees looking for a softer hit to their pensions.

Hill said she is confident Rhodes will change the city's plan to reduce the proposed cut to pensioners' retirement benefits.

"He's going to give us something," she said. "He's going to take some of the burden off us. I have that feeling."

Detroit proposes slashing $7 billion of its $18 billion debt and reinvesting $1.4 billion in critical city services over the next decade.