Aug 1 A federal court agreed on Friday to
suspend seven cases seeking to overturn a lower court ruling
that found Detroit was eligible for municipal bankruptcy.
The Sixth Circuit U.S. Court of Appeals' action followed
motions filed on Thursday by attorneys for Detroit pension
funds, unions and others requesting that the cases be suspended
instead of dismissed until the city concludes a confirmation
process for its bankruptcy exit plan.
The appeals court had initially scheduled oral arguments for
July 30 for the seven cases. But those proceedings were
eventually canceled at the request of the city and the appealing
parties due to actual or pending settlements.
In the wake of the cancellations, the appealing parties were
given a Thursday deadline to inform the court if they wanted to
dismiss their cases.
Instead of dismissals, the parties asked the court to hold
off on ruling on any issues in the cases, adding however that
the appeals process could be resumed if Detroit's current plan
to adjust $18 billion of debt is changed or fails to be
The appeals took issue with U.S. Bankruptcy Judge Steven
Rhodes' contention that pensions could be cut as part of the
city's restructuring efforts despite protections in the Michigan
Constitution against impairing public worker pensions. 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 Rhodes' December ruling, Detroit has reached
settlements with most of its major creditors. Active and retired
city workers overwhelmingly voted to accept the city's debt
adjustment plan, which calls for cuts to retiree pensions and
Rhodes has set an Aug. 21 start date for the confirmation
hearing, which will determine if the plan is fair and feasible.
(Reporting by Karen Pierog; editing by Andrew Hay)