The General Retirement System and Police and Fire Retirement
System. Detroit's two largest unsecured creditors, filed the appeal
with the 6th Circuit late Thursday. The expedited appeal would
bypass the U.S. District Court for the Eastern District of Michigan.
"Resolution of the City's eligibility will have life-changing
consequences for active and retired police officers, firefighters,
librarians, government clerks, public works employees and many
others," attorneys for the pension funds wrote.
Earlier this month, U.S. Bankruptcy Judge Steven Rhodes ruled that
Detroit met the federal requirements for bankruptcy because the
city, with $18.5 billion in debt, was insolvent and could not
negotiate with all its creditors. Rhodes also ruled that pension
benefits could be cut as part of Detroit's restructuring efforts.
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The pension funds, and others objecting to the Detroit bankruptcy,
have maintained that Michigan's constitution protects pensions from
being slashed.
In their appeal, the pension funds said Detroit's plan to cut
pensions could set a precedent and cause other troubled U.S. cities
to also cut pension benefits as a way to reduce debt.
Last week Rhodes said groups objecting to the bankruptcy could
appeal directly to the 6th circuit. But he said it would be best for
the bankruptcy court to decide on the merits of Detroit's debt
adjustment plan without the distraction of any appeals.
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"It is time now to begin that discussion, unfettered by piecemeal
appellate litigation," Rhodes wrote in his opinion last week.
Detroit Emergency Manager Kevyn Orr has said he intends to submit to
the court in early January the city's plan to deal with its debt.
(Reporting by Joseph Lichterman; editing by Richard Chang)
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