Detroit must disclose the “fee letter” laying out how much Barclays Plc’s investment-banking unit would collect on a $350 million bankruptcy loan the insolvent city is seeking, a judge ruled.
U.S. Bankruptcy Judge Steven Rhodes today denied Detroit’s request to file the fee letter under seal, saying it would normally be released under Michigan’s Freedom of Information Act. Fee letters are often sealed in corporate bankruptcies.
The city argued that its letter contained “confidential commercial information” about the cost of the financing, which is being arranged by the unit of London-based Barclays. Creditors including one city union argued that because the city is taxpayer-funded, it shouldn’t be allowed to keep the fee information secret.
“That Barclays, for its own competitive reasons, wants it to be confidential is quite irrelevant,” Rhodes said in court today in Detroit. “It is even irrelevant that the city agreed to keep it confidential.”
Detroit filed the biggest municipal bankruptcy in U.S. history in July, saying it couldn’t repay all of its $18 billion in debt and still provide basic services.
Most of the $350 million loan would go toward buying the city’s way out of interest-rate swap contracts that have cost it $50 million a year, Detroit has said.
The case is In re City of Detroit, 13-bk-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit).