City Of Detroit Moves Forward With Bankruptcy

A judge has overruled last week’s ruling that bankruptcy would violate Michigan state law.

Paul Sancya / AP

Protesters carry a sign outside the Levin Federal Courthouse in Detroit on Wednesday.

Despite arguments that Detroit’s bankruptcy would harm the pensions of city retirees, a federal judge has halted several lawsuits filed against the city and allowed its bankruptcy filing to proceed.

The hearing Wednesday went on for nearly two hours before U.S. District Judge Steven Rhodes sided with city attorneys, who argued that bankruptcy opponents hadn’t presented “a valid bankruptcy petition.” The potential effects of bankruptcy on city retirees’ pensions are currently unknown.

Still, opponents stuck to their argument that the bankruptcy goes against Michigan law, which protects pensions. From The Detroit News:

The Chapter 9 filing is trying to override the state constitution, which protects vested pension benefits, added Sharon Levine, an attorney who represents Michigan Council 25 of the American Federation of State, County & Municipal Employees, AFL-CIO.

“The filing is arguably flawed because it is going after pensions,” Levine told Rhodes.

State residents “have an absolute right to protect their constitutional rights,” she added.

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