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Judge: Detroit eligible for Chapter 9 bankruptcy

By The Associated Press

This article was published December 3, 2013 at 11:15 a.m.

DETROIT — Detroit is eligible to shed billions in debt in the largest public bankruptcy in U.S. history, a judge said Tuesday in a long-awaited decision that now shifts the case toward how the city will accomplish that task.

Judge Steven Rhodes turned down objections from unions, pension funds and retirees, which, like other creditors, could lose under any plan to solve $18 billion in long-term liabilities.

But that plan isn’t on the judge’s desk yet. The issue for Rhodes, who presided over a nine-day trial, was whether Detroit met specific conditions under federal law to stay in bankruptcy court and turn its finances around after years of mismanagement, chronic population loss and collapse of the middle class.

Read more in Wednesday's Arkansas Democrat-Gazette.

Comments on: Judge: Detroit eligible for Chapter 9 bankruptcy

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Displaying 1 - 8 of 8 total comments

Dontcallmenames says... December 3, 2013 at 11:43 a.m.

I'll bet the judge has Democrat ties...

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Fdworfe says... December 3, 2013 at 12:24 p.m.

We all know that bankruptcy laws are very complex, can be a lifesaver, a new start, a boon to commerce, certainly better than a debtors prison stint in any case, on-and-on. But the much easier, different and first impression is that (a Detroit type) bankruptcy simply spawns more incompetence, more corruption, mismanagement, rewards failure—and that it has become a sleaze—no, more than that—a diabolic tool of a clever bankruptcy legal industry of manipulators who’ve carried this thing far beyond any sane or original intent. But that’s business, huh. It’s our American way of turning a tragedy into a treasure trove. Somehow it works. For some. After a fashion.

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outinthesticks says... December 3, 2013 at 2:53 p.m.

Detroit: a great example of 50+ years of non-interrupted Democratic rule.

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RBBrittain says... December 3, 2013 at 3:01 p.m.

Actually, it's Michigan's GOP governor that is pushing Detroit's bankruptcy -- largely to force the unions to take a cut in pensions the city simply can't afford anymore. The unions were against the bankruptcy, claiming a provision in Michigan's constitution prevented the bankruptcy court from cutting their pensions -- even though Federal law ALWAYS trumps state law, even the state constitution.

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HotSpringsLawyer says... December 3, 2013 at 4:07 p.m.

Federal law does NOT trump state law in the case of Chapter 9. In order to file Chapter 9, a city must be authorized to do so under state law.

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HotSpringsLawyer says... December 3, 2013 at 4:11 p.m.

This is because there is not a conflict between state and federal law -- the Bankruptcy Code (federal law) itself provides that a city is eligible to file under Chapter 9 only if it has the power to do so under state law.

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outinthesticks says... December 3, 2013 at 4:57 p.m.

My point was "how did they get there", not "how are they going to do this". I'm not so sure 50+ years of another party dominating would have been any better. This is an example of what happens when there is no opposition and therefore no checks and balances.

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HotSpringsLawyer says... December 3, 2013 at 5:22 p.m.

Government entities all over the country have pension problems whether or not there was a single party in charge. It was too easy to reach agreementts by promising soft money in the future that somebody else would have to worry about later on.

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