Michigan Judge: Bankruptcy Unconstitutional

She orders it withdrawn, and state appeals
By John Johnson,  Newser Staff
Posted Jul 19, 2013 3:59 PM CDT
Michigan Judge: Bankruptcy Unconstitutional
This 2012 photo shows an empty field north of Detroit's downtown.   (AP Photo/Carlos Osorio, File)

One little snag emerged today regarding Detroit's bankruptcy filing: A county judge declared the move unconstitutional and ordered the bankruptcy withdrawn, reports the Detroit Free Press. Judge Rosemary Aquilina also slammed the "rush to bankruptcy court" as unfair to the city's pension boards, which were in the process of trying to block such a filing—in Aquilina's own court. The judge said she's worried that a federal bankruptcy judge, unbound by state law, will slash pensions, prompting this exchange:

  • “We can’t speculate what the bankruptcy court might order,” said an assistant attorney general.
  • “It’s a certainty, sir,” said Aquilina. “That’s why you filed for bankruptcy.”

The judge promised to make sure that President Obama sees her ruling, and she thinks he will make sure that existing pensions were honored. "I know he's watching this." Immediately after her ruling, the state's attorney general filed an appeal with the Michigan Court of Appeals, reports the Detroit News. A quick decision is expected. It's also possible that a federal bankruptcy judge will weigh in—even though the city filed for Chapter 9, a bankruptcy judge still must determine whether the city qualifies. (Read more Detroit stories.)

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