Judge: Detroit Can Go Through With Chapter 9 Bankruptcy

Detroit can dump billions of dollars worth of debt in the largest municipal bankruptcy in U.S. history, a federal judge ruled today.

Judge Steven Rhodes said that the city met federal conditions to stay in bankruptcy court to untangle its $18 billion in liabilities. “This once proud and prosperous city can’t pay its debts. It’s insolvent. It’s eligible for bankruptcy,” Rhodes said.

Before the city filed for bankruptcy in July, almost 40 cents on every dollar went to paying off debt; the city claims that without restructuring that figure could rise to 65 cents on the dollar.

Rhodes ruled that Michigan’s constitutional protections for public pensions, which dictate that they “shall not be diminished or impaired,” did not completely bar doing so in a bankruptcy. Pensions, he ruled, could be cut like any other contract, though he warned that he wouldn’t automatically approve any pension cuts the city puts forth.

A large portion of the bankruptcy hearings dealt with whether the city had negotiated in good-faith with its creditors before it filed for bankruptcy. Unions and pension funds contended that the city and its emergency manager, bankruptcy lawyer Kevyn Orr,  did not conduct such talks.

Minutes after the ruling, Sharon Levine, attorney for the American Federation of State, County and Municipal Employees, the city’s largest union, pledged to appeal the decision.

Most Popular


Romney Is a Misfit for America

Mitt’s back. The former governor of Massachusetts and occasional native son of Michigan has a new persona: Mr. Utah. He’s going to bring Utah conservatism to the whole Republican party and to the country at large. Wholesome, efficient, industrious, faithful. “Utah has a lot to teach the politicians in ... Read More
Law & the Courts

What the Second Amendment Means Today

The horrifying school massacre in Parkland, Fla., has prompted another national debate about guns. Unfortunately, it seems that these conversations are never terribly constructive — they are too often dominated by screeching extremists on both sides of the aisle and armchair pundits who offer sweeping opinions ... Read More

Fire the FBI Chief

American government is supposed to look and sound like George Washington. What it actually looks and sounds like is Henry Hill from Goodfellas: bad suit, hand out, intoning the eternal mantra: “F*** you, pay me.” American government mostly works by interposition, standing between us, the free people at ... Read More
Film & TV

Black Panther’s Circle of Hype

The Marvel Cinematic Universe (MCU) first infantilizes its audience, then banalizes it, and, finally, controls it through marketing. This commercial strategy, geared toward adolescents of all ages, resembles the Democratic party’s political manipulation of black Americans, targeting that audience through its ... Read More