Skip to comments.Federal Judge Blocks Lawsuits Against Detroitís Bankruptcy (Bankruptcy Moves Forward)
Posted on 07/24/2013 7:23:38 PM PDT by DogByte6RER
Federal judge blocks lawsuits against Detroits bankruptcy
Judge Steven Rhodes stopped three lawsuits threatening to undo the citys Chapter 9 bankruptcy filing. Detroit retirees had argued that the bankruptcy could dimish their pensions.
DETROIT A federal judge agreed with Detroit on Wednesday and stopped any lawsuits challenging the city's bankruptcy, declaring his courtroom the exclusive venue for legal action in the largest filing by a local government in U.S. history.
The decision by U.S. Bankruptcy Judge Steven Rhodes was a major victory for Detroit, especially after an Ingham County judge last week said that Gov. Rick Snyder ignored the Michigan Constitution and acted illegally in approving the Chapter 9 filing. That ruling and others had threatened to derail the case.
Retirees had sued, claiming the bankruptcy threatened their pensions that are protected by the constitution.
"If these actions are not stopped, the city would be irreparably harmed. ... These litigants will have due process. They will have their day in court" bankruptcy court, Detroit attorney Heather Lennox said during two hours of arguments by the city, pension funds and unions.
Rhodes said Wednesday there's nothing in federal law or the U.S. Constitution that gives a state court a concurrent role in a bankruptcy.
The courtroom was jammed with lawyers representing some of the thousands of creditors as well as rank-and-file city employees and retirees eager to know the outcome. Some wore T-shirts that said, "Detroit vs. Everybody."
Detroit emergency manager Kevyn Orr, who recommended bankruptcy, sat in the front row. Outside the courthouse, protesters held a banner with a message for Wall Street: "Cancel Detroit's debt. The banks owe us."
There are three lawsuits in state courts challenging the bankruptcy. They mostly focus on a provision in the Michigan Constitution that says public pensions "shall not be diminished or impaired." Pensions have not been frozen or reduced in the bankruptcy so far, but officials say there are shortfalls in the funds and that payouts could be at risk.
Sharon Levine, an attorney for a union that represents city workers, urged Rhodes to let those lawsuits run their course. She said there's no federal insurance for public pensions once they're broken, unlike pensions at private employers.
"Our members who participate at most are at or below $19,000 a year. There is no safety net," Levine said.
Heads up American Taxpayers...
To the creditors:
Any money that Detroit has left will be snatched up by the lawyers.
This judge is very highly regarded and is retiring at the end of the year.
I expect a very well run trial and a well-reasoned decision.
Yep and the U.S. Taxpayers will foot the bill!
District Court Judges 0
Sometimes life is a B.
I’m feeling kinda B+ right now ...
Of course. It had to be something like that.
It’s is called an automatic stay. Anyone who knows squat about the law knew this was going to happen.
These idiotic low information types don’t even know that it isn’t bank debt, it is mostly municipal bond debt. Morons.
But, but, but according to dippy Judge Aquavita (whatever) this is not honoring President Obummer!
Is that the same Mr Rhodes from Married with Children?