Skip to comments.Judge Rules That Detroit Bankruptcy Filing Is Unconstitutional
Posted on 07/19/2013 2:23:28 PM PDT by SeekAndFind
A Michigan judge ruled today that Detroit filing for chapter 9 bankruptcy on Thursday was unconstitutional. Ingham County Circuit Judge Rosemarie Aquilina said the filing must be withdrawn and that, according to the Detroit Free Press, the governor and city emergency manager “must take no further actions that threaten to diminish the pension benefits of City of Detroit retirees.”
The reduction in those particular benefits is at issue here, due to a portion of the Michigan Constitution that reads [PDF]:
“The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.”
The judge interpreted this passage to declare the bankruptcy filing unconstitutional, though this piece in the Detroit News argues that it may not be that clear-cut.
Meanwhile, Attorney General Bill Schuette is appealing the decision to the Michigan Court of Appeals and requesting the orders stayed for the time being.
No provision for Bankruptcy for states.
My guess is possibly, but the state court has no jurisdiction once bankruptcy was files and the proper place to make an argument about the constitutionality of the filing would be in the Federal bankruptcy court.
Apparently this judge believes it is okay to write rubber checks and they won’t bounce just because she says so. Perhaps she’s been watching Obama, Geithner and Bernanke for 5 years and believes if the federal government get away with writing checks without sufficient funds the state and local government can as well.
No matter what this “naive” judge says or does, the pension checks are going to start bouncing. That’s when the rubber will truly hit the road.
Be prepared for Obama to demand Congress compel the Pension Benefit Guaranty Corporation, set up to insure only private pensions and completely funded by insurance premiums from companies, to take on Detroit’s public worker pensions. Any Congressman who dares to oppose this taking of private property will be labeled a racist so McConnell, Boehner, McCain, Graham, and the rest will trip over themselves passing the legislation.
After the pension are taken care of by private industry, expect a push for billions to fund public works and infrastructure projects to rebuild Detroit.
The U.S. Bankruptcy Code trumps state law. It is called federal preemption, a concept most first year law students are familiar with.
Of course, since the judge is a Democrat, she only has to apply the laws that she likes when she feels like it.
I wonder when the position was born that "you can't get blood out of a turnip" except when it involves public employees.
If the City of Detroit is ever resurrected, it is doomed to fail again if public unions, all of them, are allowed to exist. Public employment of the incompetent as a hidden welfare program, has been tried and failed.
It's not rocket science, make public employee wages, including benefits, never higher than the average private sector similar job
And secondly, bar forever affirmative action, and make all positions competitive, meaning taking and passing a competency test; highest scores get hired first, color blind and politics blind.
Ignore common sense at your peril.
Leave welfare to the welfare (not a typo>) welfare industry.
Tried that, monumental FAIL!
She just wants to keep HER future pension safe.
That's a very simple but important point. The Michigan constitution didn't say that this applied to public entities but not private entities.
Are all pension adjustments for private companies that go bankrupt now null and void in Michigan according to this interpretation, or does this only apply to public entities with SEIU and possibly NEA employees?
Frankly, I don't think she has judicial standing here, anyway. I've heard shee's a county judge, and therefore a state level municipal bankruptcy should be out of her jurisdiction. The outrageous expansion of judge's power in recent decades cannot be what the Founders intended.
It was the state constitution and not the Federal constitution.
I think the pensions would have priority under Federal laws anyway. The judge may have some leeway to reduce the liability, but I would expect the pensions to take the softest hit of anyone.
Kind of a young Margot Kidder after she went nuts looks to her.
So, going broke is unconstitutional? A wave of the judicial magic wand, and the natural laws of economics are fixed. Wow!
Next up: gravity is unconstitutional.
Bulldoze the city, build windmills and solar panels and the city will be flush with gazillions of dollars. Fer sure!
The old saying, “you can’t get blood out of a turnip”, comes to mind.
New Michigan law: “The income tax rate on public employee pensions and benefits shall be 50%”
Maybe true, but this should be argued in Bankruptcy court. No way can this judge order all debt out of bankruptcy because of one class of creditors. This is why we have bankruptcy court. The retiree can argue the retirement plans are not part of the bankruptcy, in essence, claim the highest level of creditor protection.
IF Deetroit were to go bankrupt (as they have and Legally should be), the rest of the Country's taxpayers wind up paying the tab, to keep the inner-city tribal parasites basking in their glory at Whitey's expense, as always.
When you're drowning, as a result of stupidity, you best not criticize your rescuer for throwing you a bare life preserver, instead of one with 500 pounds of bricks permanently attached!
If that is the basis for her decision then I support it 100%. I worked almost 35 years for my private sector employer with a guarantee that I would receive X dollars when I retire. I planned my retirement future on that guarantee. If my company were to file bankruptsy and try to terminate or reduce my guaranteed pension, that would financially destroy me. I would hope this judge were in my corner...........
Attractive for a judge. Send her to my house, and I’ll impeach her!