US court ruling casts doubt over Detroit bankruptcy application

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US court ruling casts doubt over Detroit bankruptcy application

US court ruling casts doubt over Detroit bankruptcy application
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The first legal shots have been fired in what looks set to be a protracted US court battle over Detroit’s bankruptcy application.

A state judge has ruled the move illegal saying it violates Michigan’s constitution and the governor has no right to “diminish or impair pension benefits”.

Ingham County Circuit Court Judge Rosemarie Aquilina sided with creditors including retired city workers who fear Detroit will not pay pensions in full.

Al Grant, Secretary and Treasurer for the Retired Detroit Police and Fire Fighters Association said:
“Hey, you made a promise. You just can’t say, ‘Eh, forget about that’. They kicked the can down the road long enough, and they said, ‘It’s not my problem. I’ll be out of office. I won’t be there’. It’s all catching up now. I don’t think it’s right for us to have to take any hit. We paid our dues.”

Michigan’s Attorney General quickly filed an appeal, and Detroit and does not have to obey the ruling immediately.

But those now running the city – once famous for its car industry and Motown, now synonymous with urban collapse – acknowledge that bankruptcy presents difficult choices.

“Yes there are 9,700 employees (of the city) and there are 19,700 – 20,000 retirees (of the city) but there are 700,000 citizens who don’t deserve a fifty-five minute (emergency) response time, who don’t deserve endemic blight and crime, who don’t deserve no hope and future and just continue debt over debt and debt and borrowing so we have to do this in some fashion, and bankruptcy will allow us to achieve that in some level,” said Detroit’s Emergency Manager, Kevyn Orr.

Detroit’s emergency manager said he hoped the bankruptcy process would be concluded by September 2014.

But experts believe the case could drag on for years.

Halting what Michigan’s governor called “60 years of decline” is not going to happen overnight.