Reuters

A victory for the city's lawyers, a defeat for public-employee unions.

Since the moment Detroit filed for bankruptcy last Thursday – making it the largest municipality in U.S. history to ever resort to the tactic – civil servants and retirees who stand to lose part of their pensions in any debt restructuring have argued that the city legally doesn't have the right to go bankrupt. The Michigan constitution, they've argued, bars any action that threatens the pensions of public employees, as a bankruptcy ruling would theoretically make possible. And on Friday, an Ingham County Circuit judge agreed with the unions, ruling the bankruptcy unconstitutional.

Now, some of those obstacles to city emergency manager Kevyn Orr's strategy have been cleared by a U.S. Bankruptcy Court judge. With protesting public servants picketing outside, a federal judge suspended all outside legal challenges on Wednesday. This doesn't mean that the city is eligible for bankruptcy – that decision is yet to come. But Judge Steven Rhodes ruled that federal courts, and not state courts (nor an Ingham County judge), will make that call.

Opponents of the bankruptcy effectively cannot try to derail or bog it down now with lawsuits filed in other jurisdictions (typically, all other litigation is suspended during a bankruptcy filing). All issues related to the city's bankruptcy, Rhodes ruled, will be decided in bankruptcy court. The decision is a victory for the city and its emergency manager. Further delays in the case, Rhodes said in his ruling, would only harm Detroit.

Now the city and everyone watching it can prepare for the next court date, on Aug. 2.

Top image of protesters outside a federal courthouse in Detroit on Wednesday: Rebecca Cook/Reuters

About the Author

Most Popular

  1. An illustration of a private train.
    Transportation

    Want to Buy a Private Railroad Car? This Might Be the End of the Line

    If you dream of roaming the U.S. in a your own personal train car, you still can. But Amtrak cuts have railcar owners wondering if their days are numbered.

  2. Equity

    How Poor Americans Get Exploited by Their Landlords

    American landlords derive more profit from renters in low-income neighborhoods, researchers Matthew Desmond and Nathan Wilmers find.

  3. Design

    Cities Deserve Better Than These Thomas Heatherwick Gimmicks

    The “Vessel” at New York’s Hudson Yards—like so many of his designs—look as if the dystopian world of 1984 has been given a precious makeover.

  4. A photo of a new subdivision of high-end suburban homes in Highland, Maryland.
    Equity

    Unpacking the Power of Privileged Neighborhoods

    A new study shows that growing up in an affluent community brings “compounding privileges” and higher educational attainment—especially for white residents.

  5. Transportation

    China's 50-Lane Traffic Jam Is Every Commuter's Worst Nightmare

    What happens when a checkpoint merges 50 lanes down to 20.