Judge rules Detroit can't file bankruptcy
Schuette appeals Ingham County judge's order to withdraw bankruptcy case
Detroit News Lansing Bureau
Judge Rosemarie Aquilina
Judge Rosemarie Aquilina (Dale G. Young/The Detroit News)
Lansing — Ruling the governor and Detroit’s emergency manager violated the state constitution, an Ingham County Circuit judge ordered Friday that Detroit’s federal bankruptcy filing be withdrawn.
“It’s absolutely needed,” said Judge Rosemary Aquilina, observing she hopes Gov. Rick Snyder “reads certain sections of the (Michigan) constitution and reconsiders his actions.”
The judge said state law guards against retirement benefits being “diminished” but there will be no such protection in federal bankruptcy court.
State-level legal skirmishing over the Chapter 9 bankruptcy effort by Snyder and Detroit Emergency Manager Kevyn Orr now will quickly move to the Michigan Court of Appeals.
Attorney General Bill Schuette, on behalf of Snyder, filed an application for Appeals Court consideration of Aquilina’s order an hour after it was issued.
Schuette asked the Appeals Court to put a hold on present and future lower-court proceedings and was planning to seek emergency consideration to expedite the process, said spokeswoman Joy Yearout.
While experts say federal proceedings take precedence, state-level legal maneuvering could delay the process. Pension board attorneys said their pleadings ultimately could wind up in federal court, too.
Snyder authorized Thursday’s bankruptcy filing in U.S. District Court in Detroit by Orr and his legal team. That was to set in motion a process, normally taking 30- to 90 days, in which the court determines whether Detroit qualifies for bankruptcy.
The filing involved a bit of courtroom drama.
With rumors it was eminent Thursday afternoon, attorneys representing the pension boards hurried into Aquilina’s court in Lansing to ask for a temporary restraining order.
But Snyder and Orr beat them by a few minutes. Aquilina, informed by phone, allowed the pension board lawyers to revise their restraining order request, then granted it.
Prior to her ruling on Friday, the judge criticized the Snyder administration and Attorney General’s Office over its hasty move to outflank pension board attorneys.
“It’s cheating, sir, and it’s cheating good people who work,” the judge told assistant Attorney General Brian Devlin. “It’s also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy.”
Aquilina said she would make sure President Obama got a copy of her order.
“I know he’s watching this,” she said, predicting the president ultimately will have to do something to make sure existing city workers’ pension agreements are honored.
Pension board lawyers are contending federal bankruptcy proceedings shouldn’t put city workers’ retirement benefits at risk.
Southfield attorney John Canzano, representing several pension plan members, said bankruptcies of cities such as Stockton, Calif., have been handled in a way that didn’t compromise pensions.
From The Detroit News: http://www.detroitnews.com/article/20130719/METRO01/307190099#ixzz2ZXFzn93z