Judge OKs Detroit Bankruptcy, Pension Cuts

Judge says filing was 'foregone conclusion'

By Kevin Spak,  Newser Staff

Posted Dec 3, 2013 10:40 AM CST

(Newser) – A federal judge today gave Detroit the bankruptcy protection it sought, dismissing challenges from banks and labor unions, the Detroit News reports. Vested pensions aren't subject to any special protections either, Judge Steven Rhodes said; they're just contracts like any other, and "it has long been understood that bankruptcy law entails the impairment of contracts." He did warn, however, that he would "not lightly or casually exercise power to impair pensions."

The judge swept aside a host of other objections as well. He said there was ample evidence that Detroit was insolvent, and that while the city did not make the requisite good faith effort to negotiate with its creditors, it also would have been "impractical" given that there are 100,000 of them. Selling the city's trove of valuable artwork, he argued, would only "delay inevitable financial failure." Indeed, the city probably should have declared bankruptcy sooner, he said. "Was it a foregone conclusion? Of course it was."

Detroit city workers and supporters protest outside the federal courthouse in Detroit while awaiting the bankruptcy decision, Dec. 3, 2013.
Detroit city workers and supporters protest outside the federal courthouse in Detroit while awaiting the bankruptcy decision, Dec. 3, 2013.   (AP Photo/Carlos Osorio)
The Rev. Charles Williams II, left, leads Detroit city workers in a protest outside the federal courthouse in Detroit while awaiting the bankruptcy decision, Dec. 3, 2013.
The Rev. Charles Williams II, left, leads Detroit city workers in a protest outside the federal courthouse in Detroit while awaiting the bankruptcy decision, Dec. 3, 2013.   (AP Photo/Carlos Osorio)
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