Insights | Blog
I am sure at 2:31 pm yesterday, immediately after Judge Rhodes ruling, the City and the Swap Bank’s financial advisors and attorneys were wondering why they spent the Christmas holidays in long sessions negotiating and not sitting around a fire with their families drinking eggnog. They delivered for the Judge a better deal for the City, saving another $65 million and received the Judge appointed mediator’s blessing on a job well done. I guess I am curious what else were they to do. The reasons Judge Rhodes gave for his decision were facts that were in existence before he told them to go back to the drawing board. They weren’t going to change those with long sessions of negotiating. There is no question the City got a better deal. Kudos to the team for the creditors and retirees. I personally think, as I said yesterday, this is the right decision. It is too early in the process to make this kind of deal for a select group of creditors. The confirmation process, where all stakeholders can see everyone’s deal, is the time for these kind of approvals and settlements. As I said yesterday, the City’s litigation option should have been more seriously considered after the Judge’s first ruling. However, that option was not discussed by Judge Rhodes at the first ruling. Typically plaintiffs with good cases aren’t writing nine figure checks to settle. Perhaps the Judge thought it was so obvious that it would have driven the price lower than what the City came back with. I think the Judge’s decision, while right, had to surprise the City. A big victory for the retirees and the creditors. A good nog, warm fire, time with the family created the formula for well-crafted and articulated arguments by the retirees and creditors in the New Year. Who says eggnog is overrated.