Judge rules that his Detroit bankruptcy finding can be directly appealed

Dec 16, 2013

The judge in Detroit’s bankruptcy case says creditors can appeal his recent eligibility ruling directly to a higher federal court.

Judge Steven Rhodes ruled earlier this month that Detroit is eligible to proceed with its historic bankruptcy case.

He also ruled that city pensions can be cut in federal bankruptcy court — despite a public pension guarantee in Michigan’s state constitution.

City unions, pension funds and retiree groups immediately said they intended to appeal both decisions.

Now, Rhodes has ruled that both can be appealed directly to the Sixth U.S. Circuit Court of Appeals.

City lawyers had argued against allowing an appeal now. They wanted Rhodes to wait until after he’d approved the city’s plan to restructure its billions of dollars of debt.

Creditors are also pushing for an expedited appeal.

But Judge Rhodes did not say whether he would recommend a fast-track ruling saying he needed more time to think over that issue.

Lawyers for the unions say other governments need quick clarification on the issue.

From the Associated Press:

Sharon Levine, an attorney for the American Federation of State, County and Municipal Employees, said an immediate appeal is important because the union is concerned that Rhodes' decision could be applied in other states where governments are struggling.

"This is an issue of national importance. ... We do think having these issues decided quickly would be constructive," she told the judge, referring to Detroit's eligibility for bankruptcy and the impact on pensions.

The appeal does not slow down the bankruptcy process. Detroit's emergency manager, Kevyn Orr, hopes to have his reorganization plan submitted to bankruptcy court by January.