Tuesday, December 3, 2013

Detroit Bankruptcy Allowed to Proceed

The New York Times reports:
The struggling metropolis of Detroit, overwhelmed by debt and groping for a path forward, on Tuesday became the largest American city ever to qualify for bankruptcy protection. 

Judge Steven W. Rhodes of the United States Bankruptcy Court, found that Detroit was insolvent and that the pension checks of retirees could be cut during a bankruptcy proceeding, a crucial part of his decision.

 Under the ruling, the vastly diminished city, once the nation’s fourth largest and the cradle of the American auto industry, will now be allowed to search for a way to pay off some portion of its debts and restore essential services to tolerable levels under court supervision. The goal, according to an emergency manager appointed by the state of Michigan, is to emerge next year from court protection with a formal plan for starting over. 

“This once proud and prosperous city cannot pay its debts. It is insolvent. It’s eligible for bankruptcy,” Judge Rhodes said Tuesday. “But it also has an opportunity for a fresh start.” 
While attorneys for the public workers unions intend to appeal, I think it is likely that Judge Rhodes decision will be upheld.  State law (protecting public workers' pensions) does not trump federal bankruptcy law.   The Supremacy Clause of the Constitution demands that result.


guy77money said...

That's with incredible low interest rates. As long as rates stay low most cities and towns will be ok. If we see rates rise to 1970's level (10% or more) then we will more bankruptcy's. When will rates rise? That's a question for economic professors not I.

Unknown said...

Just remember even if, no matter high class keep an eye on you select, you'll certainly be buying an issue that'll be by means of gucci replica handbag you will for evere ? that come. For that reason, at the same time there are a number devices that can be found and additionally numerous particularly very affordable, luxuries keep an eye on cheap replica rolex is actually which usually: luxuries keep an eye on. High class totals by means of opulence, so luxuries keep an eye on can request a more expensive fee. The crucial element you have to verify is normally ways quite simply you’re able to talk to your any carrier. Know when you can get any carrier forward replica rolex watches all the devices in your direction fairly quickly and additionally quickly. May well all the carrier dispatch deliveries in your direction about the chanel replica short-term take note of? Plus you prefer to finally understand what designs the particular closeout business feature and additionally keep.