Posted on 07/22/2013 6:14:02 AM PDT by Kaslin
On Friday, a Michigan Circuit Judge Rosemarie Aquilina ruled Detroit bankruptcy is unconstitutional.
On Friday, a circuit court judge in Ingham County ruled that Detroit's federal bankruptcy filing violated a part of Michigan's constitution that protects union pensions. She ordered it withdrawn, a day after Detroit became the largest U.S. city in history to file for chapter nine bankruptcy.
Judge Rosemary Aquilina also said the filing did not honor President Barack Obama's work for the city, who she said "took [Detroit's auto companies] out of bankruptcy." Aquilina said she would send a copy of her order to Obama.
“It’s cheating, sir, and it’s cheating good people who work,” the judge told assistant Attorney General Brian Devlin. “It’s also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy.”
The Detroit News reported "attorneys representing the pension boards hurried into Aquilina’s court to ask for a restraining order" on July 18, but Michigan Gov. Rick Snyder (R) and Detroit's emergency manager Kevin Orr "beat them by a few minutes" in filing for bankruptcy. The filing did not deter lawyers for union pension boards, who can use "court maneuvers to slow down federal bankruptcy proceedings."
Idiocy
The whole point of bankruptcy court is to resolve debt issues that cannot be paid. It is impossible for Detroit to meet its pension obligations and the only way to resolve the issue is in bankruptcy court.
Common Sense
In a common sense position, Michigan Governor Says Detroit’s Bondholders Part of Bankruptcy
Governor Rick Snyder of Michigan said today that the bondholders of the city of Detroit should expect to be “part of the process” of the largest municipal bankruptcy in U.S. history
“Realistically, if you step back, if you were lending to the city of Detroit in the last few years, didn’t you understand there were major issues and problems?” Snyder, a Republican, said on the CBS’s “Face the Nation” today. “Look at the yields they’re obtaining compared to other bonds. They were getting a premium.”
The plight of city pensioners is “one of the other tragic situations” in the Detroit bankruptcy, Snyder said on CBS. He said that during discussions with creditors, “no one” wanted to represent retirees, so he has asked the federal judge in the case to assemble a group of retirees to speak for them.
Pension Funding
“Short-term through the end of the year, there won’t be any change,” Snyder said. “Beyond that, the real question also is, to the degree those pension plans are funded, that they’re our assets, that they are not part of this process.”
“It’s the unfunded piece, and there’s a terrible history there of mismanagement and poor investment that should get aired out in public and should be part of this discussion,” Snyder said on CBS.
In contrast to the idiotic circuit court ruling, the statements by governor Snyder represent a fresh breath of common sense.
1. Bondholders knowing took risks so they must take a haircut.
2. The funded assets of the pension plan cannot be touched
3. Bankruptcy court will resolve the unfunded portion
What's not to like about that?
And in regards to point number three, I would hope the burden falls on the highest pension beneficiaries (most likely city officials, police, firefighters) but also taking into account length of service, rather than something like 50% haircuts across the board.
What's Next?
I expect the circuit court ruling will be overturned with prejudice, the pension plans will take a huge haircut, boldholders will take some haircut, and the overall fairness of the final decision as to how pension haircuts will be applied is up in the air.
Many other cities will follow Detroit's lead.
The difference in my mind is that when a person needs a job and is looking for a job, they don’t pay much attention to whether the job they find is in the private or public sector. They just rejoice when they get a job.
I acknowledged that those who have extravagant pensions should also have their place at the end of the line, but I’m betting there are those who have regular pensions and regular pay. In the Army we called them privates, but every hierarchy has those who aren’t even close to being those who call the shots, and who aren’t pulling down the big bucks.
My sense wasn’t that they wouldn’t take a hit. My sense was that the hit should disproportionately strike those who have extravagantly played the system.
I was pleased to see the Chapter 9 case filed. But after thinking about this state challenge, I wonder if I want to see this stay in Bankruptcy Court or be withdrawn. My paramount goal in this is that the people responsible bear the costs. I don't want to see either an explicit federal bailout, or an implicit (back door) federal bailout. The Obama Administration is getting very good at the back-door bailouts.
If it stays in the bankruptcy courts, it has the virtue of decisive bankruptcy Judges being empowered to put and end to a lot of things that caused the mess. On the other hand, if this Circuit Court Judge's patronizing of the retirees and public employees unions carries the day and they do not get bankruptcy protection, there may be less opportunity for implicit subsidy, and Detroit would have to make one whale of an explicit bailout request, which could be a good poster child for the GOP in 2014.
“Judge Rosemary Aquilina said “It’s also not honoring the (United States) president, “
I recall another regime that declared it illegal to dishonor their leader. That didn’t end easily....
Agree.
Bankruptcy is federal and will trump the state court.
That said, Federal Bankruptcy Judges will often outsource the rullings on issues of state law UP TO THE POINT OF FINALITY becuase state courts know state law. The big example is mortage forclosures and other areas where federal law does not exist.
Pensions ARE covered by the bankruptcy code and federal law.
This judge should be sanctioned for violating the automatic stay.
The judge is an idiot. OK, we already know that. But the purpose of bankruptcy is to protect the viability of the bankrupt party from a tsunami of lawsuits and attempts to attach assets, temporarily protecting it from chaotic destruction. Obviously, putting the bankruptcy on hold doesn’t get any bills paid, but it does open Detroit up to complete financial destruction.
Ef 'em. They voted for their Union representatives and in Detroit they're 98% lib-Dem voters. They deserve the screwing they're about to get. I don't care if they starve in the streets.
I’m a Christian. I care if they starve in the streets.
I don’t care if they suffer the consequences of their own actions, but those who are just the little people, who were just doing a job, who were not the big whigs, even though they might have voted wrong, I see no reason to wish them catastrophe.
At the same time, I pray they see the light.
According to the law, the bondholders come first.
In the current environment, there are no laws.
I cite as examples John Corzine and MFGlobal and “rehypothecation”. Another example, The UAW pensions got moved way ahead of the bondholders in the GM case.
In place of laws, we now have political lynch mobs.
In the Trevon Martin case, we had a political lynch mob to indict and convict Zimmerman.
In the case of illegal immigation, we have a pro amnesty lynch mob.
Here we have a “screw the bondholders” lynch mob.
I don't think the state constitution has anything to do with it, pension plans fall under the ERISA guidelines.
With that being said, I recall the great Detroit Tiger pitcher and sociopath Denny McClain, along with his equally treacherous partner Roger Smigiel, bought out Peet Packing, a meat packing plant in Chesaning, Michigan in order to raid the company's 3 million dollar pension plan after it closed.
I know many retirees who are going to be affected and if my dad were still alive, he would be too since he was a retired cop as was my grandfather.
This isn't about penalizing retires simply because they were working for a liberal city government as several posters above seem to be pleased with, this is about people who spent their lives in their jobs, regardless of their political affiliation, and were guaranteed a pension upon retirement.
Those guarantees came from the mouths of politicians. Anyone who believes the promises of politicians deserves to take it in the backside.
Who are you refering to, the workers on pensions?
Use that same argument to a retiree of Delphi and he's likely to put a bullet in your ignorant head.............
Just curious Lurker, is there any private sector pension plan out there that went bankrupt that you wouldn’t blame the worker simply for his participation in it?
I invite them to try to put a bullet into me.
The “workers” in Detroit are 98% lib Dem. They voted for this crap for decades. Let them choke on it. I hope they all starve. Delphi workers didn’t work for government. Learn the difference, pogue.
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