Government Law

Federal judge OKs Detroit bankruptcy, says city can cut pensions for retirees


Downtown Detroit. Image from Shutterstock.

Ruling from the bench on Tuesday, a federal judge said the city of Detroit met eligibility requirements to proceed with its Chapter 9 bankruptcy.

The decision by U.S. District Judge Steven Rhodes, which will be followed by a written opinion, sets the stage for the largest-ever municipal bankruptcy in this country. It also included a surprise announcement that the city would be allowed to cut pensions for retirees, so long as they are part of a fair and equitable overall plan, according to the Detroit Free Press and Reuters.

“The court finds that Detroit was and is insolvent,” Rhodes said. “The court finds that the city was generally not paying its debts as they became due.”

See also:

ABA Journal: “The Next Chapter: Municipalities Are Using Chapter 9 to Fend Off Creditors” “Detroit files for bankruptcy, the biggest US city ever to do so”

Detroit Free Press: “4 main rulings on eligibility criteria for Detroit bankruptcy case”

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