Objectors in Detroit bankruptcy ask to appeal directly to circuit court

DETROIT Wed Dec 4, 2013 10:50pm EST

Pedestrians walk along Woodward Avenue in Detroit, Michigan December 3, 2013. REUTERS/Joshua Lott

Pedestrians walk along Woodward Avenue in Detroit, Michigan December 3, 2013.

Credit: Reuters/Joshua Lott

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DETROIT (Reuters) - Organizations that objected to Detroit's bankruptcy separately asked the U.S. judge overseeing the case late on Wednesday to allow an appeal of the case to go directly to the U.S. 6th Circuit Court of Appeals.

Groups led by Detroit's largest union - Michigan Council 25 of the American Federation of State, County and Municipal Employees - and the city's two pension funds filed requests with the bankruptcy court to bypass the U.S. District Court for the Eastern District of Michigan and go directly to the appeals court.

"The Sixth Circuit eventually will decide whether the City is eligible to be a Chapter 9 debtor," attorneys representing the pension funds wrote in their motion. "The only question is timing. Because time is manifestly of the essence, this Court should certify its eligibility ruling for an immediate appeal to the Sixth Circuit."

AFSCME in another filing had previously asked U.S. Bankruptcy Judge Steven Rhodes, who is overseeing the case, to allow an appeal directly to the 6th Circuit, but in his ruling on Tuesday Rhodes said any motions for a direct appeal must be separately submitted to the bankruptcy court.

Proceedings will continue in the bankruptcy court even as the case is appealed. Detroit Emergency Manager Kevyn Orr said Tuesday that the city plans to submit its restructuring plan to the court for approval by early January.

Rhodes on Tuesday said Detroit was eligible for bankruptcy because it was insolvent and negotiations with its thousands of creditors were not practical.

The judge also said that Detroit could cut pensions as part of its restructuring, turning back an argument from the unions, pension funds and retirees objecting to the bankruptcy by asserting that pensions were protected by the Michigan constitution.

Detroit, with $18.5 billion in debt, is the largest U.S. city ever to go bankrupt. Rhodes on Tuesday declared Detroit eligible in a more than hour-long oral decision. He has yet to issue a written opinion.

(Reporting by Joseph Lichterman; Editing by Ken Wills)

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Comments (2)
z0rr0 wrote:
Only 20 years ago, an NJ Governor named Christie Whitman decided not to fund the state pension, with the blessing of the court. Within the next decade, politicians across the US grabbed at the annual pension contributions as if it was a candy jar at Halloween.

20 years ago the court’s ruling was based on the obligation of NJ to make monthly pension check, not to “maintain a fund”. Judge Rhodes just set the precedent for the next generation of politicians to ignore the obligations to retirees.

The private sector has killed pensions for it’s retirees. The public sector, I fear will be following shortly!

Dec 05, 2013 2:50pm EST  --  Report as abuse
z0rr0 wrote:
Only 20 years ago, an NJ Governor named Christie Whitman decided not to fund the state pension, with the blessing of the court. Within the next decade, politicians across the US grabbed at the annual pension contributions as if it was a candy jar at Halloween.

20 years ago the court’s ruling was based on the obligation of NJ to make monthly pension check, not to “maintain a fund”. Judge Rhodes just set the precedent for the next generation of politicians to ignore their obligations to retirees as well.

The private sector has killed pension for it’s retirees. The public sector, I fear will be following shortly!

Dec 05, 2013 3:31pm EST  --  Report as abuse
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