Finance

Detroit Bankruptcy Judge Allows Appeal of Eligibility, Pension Rulings

December 17, 2013

U.S. Bankruptcy Judge Steven Rhodes on Monday allowed appeals of two of his critical rulings — finding Detroit eligible for bankruptcy and its pension systems subject to cuts to retirees — to proceed to the U.S. 6th Circuit Court of Appeals.

 
Rhodes certified his eligibility ruling, which allows creditors including labor unions and the official group representing retirees to appeal his decision to permit Detroit to enter into the largest municipal bankruptcy in U.S. history.
 
Rhodes did not act on requests from lawyers for unions and retirees that he support their bid to fast-track appeals. Rhodes said only that he certified his Dec. 3 ruling and would decide “in the next day or two” whether to support expedited appeals in the 6th Circuit.
 
Court proceedings resume today as Rhodes begins hearing evidence in what could be a three-day trial on the city’s request for $350 million in new financing from Barclays, a London-based banking company. The financing is controversial because it would pay off about $230 million in debt owed to two banks before the city figures out how it will repay other creditors.
 
The city said it needs the additional financing now to free up about $180 million in annual casino revenue. The city also would gain access to $120 million that it could use to fund its revitalization and improve city services.
 
Orr has said that the city urgently needs to improve city services such as police and fire response times and that the additional financing is essential to those improvements.
 
During questioning on the appeals Monday, Sharon Levine, a lawyer for the city’s largest union, the American Federation of State, County and Municipal Employees, said the union sees the issue of pension rights in Detroit as one of national importance because cities and other governments across the nation pay attention to how such benefits are decided.

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