Howard Co. approves $200,000 for legal bills to collect unpaid Chrysler, Delphi taxes

ken.delabastide@kokomotribune.com

Legal costs continue to increase as Howard County attempts to collect unpaid taxes from the community's two largest employers that have gone through bankruptcy proceedings.

The Howard County Council on Tuesday approved an additional $200,000 in the commissioner's budget from the general fund to pay the Indianapolis law firm of Barnes & Thornburg.

The firm was hired to represent Howard County in the Delphi Corp. and Chrysler Group LLC bankruptcies, both of which could be completed this year.

Howard County Attorney Larry Murrell said October will mark the fourth year of the Delphi Corp. bankruptcy.

He said the county has spent a total of $117,000 for legal fees this year. Murrell said the county has spent $51,000 through June on the Chrysler LLC bankruptcy.

Barnes & Thornburg submitted a claim for $72,000 for July and Murrell expects a similar claim for August.

"I hope this will cover a couple of months," Murrell said of the $200,000. "I think we have reached a peak and the bills should start declining."

Murrell said he didn't know if the funds would get the county through the remainder of the year.

Through Barnes & Thornburg, the bankruptcy court for the Southern District of New York signed a court order earlier this month directing Delphi to pay Howard County $4,615,399 in personal property taxes, owned since 2005, by March 1, 2011.

The court ordered Delphi to pay $1.8 million in real estate taxes owed from 2005 over the next seven years with an interest rate of 5 percent.

General Motors, which purchased the Delphi plants in Kokomo, is responsible for paying $3.7 million in taxes due in November and $7.6 million due next year.

Murrell said Barnes & Thornburg has been performing legal work for the county for 17 years.

He explained to council members that outside legal counsel is retained once it is determined the work can't be done in-house or through a local law firm.

Murrell said determining factors are the amount at stake, complexity of the case, venue of the court hearing and the opposing counsel.

"Frankly the opposing counsel has played hard ball all the way," Murrell said. "They are not conceding anything."

Murrell said Delphi Corp. should emerge from bankruptcy in September.

"We had no choice," Murrell said of the expenditures. "We could have sat back or fought. We're going to fight to win."

Council President Dick Miller said Howard County was fortunate to find the legal expertise in Indianapolis, as Delphi and Chrysler are using law firms based in San Francisco, Dallas and Detroit.

"They have a responsibility to pay the taxes," Miller said. "The county has done everything we could to help both companies over the weeks through tax abatements."