Bankruptcy Court Rules Detroit Eligible for Chapter 9

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At a hearing on December 3, Judge Stephen Rhodes ruled that the City of Detroit was eligible to file for protection under Chapter 9 of the Bankruptcy Code. While the City filed for bankruptcy back in July and has been conducting a number of bankruptcy-related activities, this ruling officially launches the bankruptcy process. Later in the week, Judge Rhodes issued a 143-page opinion detailing his analysis. The analysis was largely based on the facts at hand and a simple application of those facts to the standards for a chapter 9 filing. Among the Judge’s most noteworthy rulings: because pension rights are contractual rights under the Michigan constitution, they are subject to impairment in a federal bankruptcy proceeding. Opinion.


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