Federal, Not State, Bankruptcy Judge to Take On Detroit Pension Case

The contentious dispute between the City of Detroit and the city’s pension funds will be decided by U.S. Bankruptcy Judge Steven Rhodes in a federal courtroom and not in state court in Ingham County, Rhodes has declared.
July 23, 2013

The contentious dispute between the City of Detroit and the city’s pension funds will be decided by U.S. Bankruptcy Judge Steven Rhodes in a federal courtroom and not in state court in Ingham County, Rhodes has declared.

In an order filed Monday, Rhodes said he will hold a hearing at 10 a.m. Wednesday to consider the city’s request to put all lawsuits filed before the city filed for bankruptcy on hold.

The decision by Rhodes means that the first hearing of Detroit’s bankruptcy case could prove to be a crucial moment in the city’s effort to restructure under court protection.

The Police and Fire Retirement System and the General Retirement System and its 20,000 retirees filed a lawsuit in Ingham County court last week that argues that Detroit’s bankruptcy filing must be withdrawn because it violates the Michigan Constitution’s protection of public employees’ pensions.

Gov. Rick Snyder and Detroit emergency manager Kevyn Orr have said that pension payments will continue unchanged for the next six months, but that adjustments will have to be made after that to deal with unfunded liabilities in the funds.

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