As the failure of cities to subsist financially continues to get major press as bankruptcies are on the rise, the Detroit case is one garnering additional attention.  Just recently, the chief judge of the U.S. District Court for the Eastern District of Michigan was selected to mediate the disputes between creditors and the city of Detroit.  The move for mediation is being heralded as an excellent decision for speeding the case along and ultimately saving money.  Gerald Rosen will be stepping in to help guide the conversations surrounding the disputes and lead parties to resolution about putting values on the financial status of city pension funds. 

Mediators have become increasingly popular for use in these kinds of major Chapter 9 bankruptcy cases and other issues of financial emergencies, such as in San Bernardino and Stockton, California.  The goal, say supporters of the Detroit mediation, is to attempt to reach a consensus without going through total litigation, which could delay the process and result in costly legal fees for the already-strapped city.  Rosen’s authority includes necessary mediation talks, as outline in the order filed by the bankruptcy judge last week. 

The mediation proceedings and discussions will remain confidential, another benefit for the city.  The crux of this particular dispute surrounds city pension funds, which some are arguing have been under funded and caused serious financial distress for the city.   Some creditors have vowed they are prepared to “fight”, but the less contentious nature of mediation proceedings could prove extremely beneficial in reducing arguments and instead leading the disputing parties towards productive talks geared for resolution.  Although emergency manager Kevyn Orr was put into place 5 months ago, relatively few settlements have occurred between the two parties, stalling the process entirely and leading members of the Detroit community disgruntled and irritated.