July 29 Detroit has been making progress in
settling disputes with its public safety unions, a development
that has put the brakes on several appeals in federal court of a
ruling that the city was eligible for municipal bankruptcy,
attorneys said on Tuesday.
Robert Gordon, an attorney representing the city's two
retirement systems, said two of the three appeals of the
December ruling, including one by the pension funds, were
postponed. The cases were slated for oral arguments on Wednesday
before the Sixth Circuit U.S. Court of Appeals in Cincinnati.
In a letter on Monday to the Sixth Circuit U.S. Court of
Appeals attorneys for Detroit, the pension funds, and the city's
police officers and firefighters unions asked for the
postponement. They cited "ongoing settlement discussions with
the city, the Detroit Fire Fighters Association and the Detroit
Police Officers Association."
The third appeal, by the Retired Detroit Police Members
Association, was also put on hold pending a settlement with the
city, according to a spokeswoman for the law firm representing
The appeals court on Friday had ordered the three cases to
proceed to the oral argument phase, while putting four other
cases on hold, even though the city had asked the court to delay
all the cases. The appeals were filed directly to the Sixth
Circuit Court in the wake of U.S. Bankruptcy Judge Steven
Rhodes' Dec. 3 ruling that Detroit was broke and eligible for
the biggest municipal bankruptcy in U.S. history.
The appeals filed by the pension funds and various labor
unions and retiree groups took issue with Rhode's contention
that pensions could be cut as part of the city's restructuring
efforts. They also argued against the legality of a Michigan law
that enabled Detroit's state-appointed emergency manager to file
the bankruptcy case in July 2013 with the governor's permission.
Since that time, Detroit has reached settlements with most
major creditors, including a deal over pension cuts with its
general and police and fire retirement systems. An overwhelming
majority of the city's active and retired workers also supported
Detroit's plan to adjust $18 billion of debt, according to
voting results released last week.
One of Detroit's last remaining major hold-out creditors,
bond insurer Syncora Guarantee Inc, will argue before the
appeals court on Wednesday over a July 11 U.S. District Court
ruling that prohibited it from blocking the city's access to
casino tax revenue.
Syncora, which insures some city bonds and interest-rate
swaps, claims it has a lien on about $11 million in monthly tax
revenue that had been used as collateral since 2009 to secure
the swaps. Earlier this year, Judge Rhodes approved a settlement
between Detroit and the swap counterparties that did not include
(Reporting By Karen Pierog, additional reporting by Lisa
Lambert; Editing by David Gregorio)