Groups led by Detroit's largest union — Michigan Council 25 of the
American Federation of State, County and Municipal Employees — and
the city's two pension funds filed requests with the bankruptcy
court to bypass the U.S. District Court for the Eastern District of
Michigan and go directly to the appeals court.
"The Sixth Circuit eventually will decide whether the City is
eligible to be a Chapter 9 debtor," attorneys representing the
pension funds wrote in their motion. "The only question is timing.
Because time is manifestly of the essence, this Court should certify
its eligibility ruling for an immediate appeal to the Sixth
AFSCME in another filing had previously asked U.S. Bankruptcy Judge
Steven Rhodes, who is overseeing the case, to allow an appeal
directly to the 6th Circuit, but in his ruling on Tuesday Rhodes
said any motions for a direct appeal must be separately submitted to
the bankruptcy court.
Proceedings will continue in the bankruptcy court even as the case
is appealed. Detroit Emergency Manager Kevyn Orr said Tuesday that
the city plans to submit its restructuring plan to the court for
approval by early January.
Rhodes on Tuesday said Detroit was eligible for bankruptcy because
it was insolvent and negotiations with its thousands of creditors
were not practical.
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The judge also said that Detroit could cut pensions as part of its
restructuring, turning back an argument from the unions, pension
funds and retirees objecting to the bankruptcy by asserting that
pensions were protected by the Michigan constitution.
Detroit, with $18.5 billion in debt, is the largest U.S. city ever
to go bankrupt. Rhodes on Tuesday declared Detroit eligible in a
more than hour-long oral decision. He has yet to issue a written
(Reporting by Joseph Lichterman; Editing by Ken Wills)