U.S. Bankruptcy Judge Steven Rhodes ruled today that the city of Detroit is eligible for bankruptcy protection, allowing the city to proceed with the largest municipal bankruptcy in U.S. history. Public employee unions are expected to appeal.
Over the objections of unions and retirees, who were trying to prevent cuts to public pensions and had argued that Detroit failed to conduct “good faith” negotiations, Judge Steven Rhodes allowed the city to enter Chapter 9 bankruptcy, report Nathan Bomey, Brent Snavely and Alisa Priddle.
“It is indeed a momentous day,” Rhodes said at the end of a 90-minute summary of his ruling. “We have here a judicial finding that this once proud city cannot pay its debts. At the same time, it has an opportunity for a fresh start. I hope that everybody associated with the city will recognize that opportunity.”
"Rhodes — in a surprise decision this morning — also said he’ll allow pension cuts in Detroit's bankruptcy," they add. "The city will now proceed with its plan to introduce a proposal to restructure its debt and reshape government operations. In a statement after the ruling, Detroit Emergency Manager Kevyn Orr said his team plans to submit a plan of adjustment in the coming weeks, file a disclosure statement early next year and work to exit Chapter 9 protection by the end of September."
FULL STORY: Judge rules Detroit eligible for historic Chapter 9 bankruptcy, says pensions can be cut
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