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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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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