FeedsCity hires bankruptcy counsel
Bankruptcy claims filed by Romulus businesses have increased so much in the last year that city council members have voted to hire private legal counselors to help collect money owed to the city.
Romulus City Council members recently approved the hiring of law firm Allard & Fish to represent the city in cases where property taxes or other funds are owed to the city.
Mayor Alan Lambert called the decision to hire the firm a necessary move, and also a dismal sign of the times.
“There are several cases where businesses have filed for bankruptcy to avoid paying us money that is owed to us,” he said. “There are also situations where we have given (the companies) abatements, and obviously we, want to collect any money that is owed to us.”
In the past, the city saw few bankruptcy cases in which they had a stake. City Attorney Barry Seifman would typically handle these cases.
“Hiring the firm was the right thing to do at this time,” Lambert said. “We’re in an environment where we have to go after any dollar we can.”
The statewide economy, which is saddled with the highest unemployment in the country and a glut of mortgage and tax foreclosures, has taken a toll on Romulus.
In the past year, two manufacturers have closed, eliminating more than 700 jobs, and about 600 homes in the city are in some stage of foreclosure, according to RealtyTrac, a clearing house which tracks such data.
In most bankruptcy claims, individuals are asked to pay back some creditors, which must get in line in court proceedings. Lambert said that the prospect of being owed money is one that cannot perpetuate itself in the city because the tax money pays for essential services like, police, fire and public works.
The city was unable to provide an exact number of bankruptcies Allard & Fish will handle, but did estimate that there are several such situations.
Allard & Fish will only handle bankruptcies filed by businesses. Business and personal bankruptcy is becoming a bigger issue in Romulus, and in Michigan as a whole.
The number of non-business bankruptcy filings in Michigan has increased from 32,746 filings in 2006 to 44,996 in 2007, according to numbers obtained by the Alexandria, Va.-based American Bankruptcy Institute.
The law firm will be paid $175 per hour for their work on bankruptcy cases, according to the contract approved by the city council members.
