Detroit’s Bankruptcy Will Trump State Law Challenge
By Kurt Orzeck
Law360, Los Angeles (July 19, 2013, 10:46 PM ET) -- Detroit's unprecedented bankruptcy filing hit a speed bump Friday when a state judge ruled it violates Michigan constitutional provisions protecting government pension benefits, but experts say the Chapter 9 case will inevitably move forward because federal bankruptcy laws have a supremacy clause that trumps state rules protecting retirees.
A day after Detroit emergency manager Kevyn Orr received authorization from Gov. Rick Snyder to submit the bankruptcy filing, Ingham County Circuit Judge Rosemarie E. Aquilina ruled that it unlawfully threatened retirees’ accrued pension benefits. The judge ordered...