Detroit Judge's Ch. 9 Ruling Will Fire Up Pension Dispute

Law360, New York (December 3, 2013, 8:11 PM EST) -- A judge’s Tuesday ruling that Detroit is eligible for bankruptcy relief came as no surprise, but his finding that public pensions can be reduced during a bankruptcy was an unexpected and forceful stand that is likely the start of a hotly contested appeals process.

U.S. Bankruptcy Judge Steven W. Rhodes said the pension funds, which are protected against cuts by Michigan’s Constitution, can in fact be reduced under federal bankruptcy law. The decision is a blow to retirees, who have clung tightly to their stance that under state law, their pensions cannot be touched.

Attorneys are predicting that the matter could...

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