DETROIT — The legal squabbling over Detroit's bankruptcy filing continued on Monday, and the federal judge overseeing the case said he would hold a hearing Wednesday to determine whether a lawsuit by retired public employees can block it.
The judge, Steven Rhodes of United States Bankruptcy Court, agreed to the hearing requested by Detroit's emergency manager in response to a Michigan judge's ruling that the city's Chapter 9 filing violated the state's Constitution because it could cut city workers' pensions. The emergency manager, Kevyn D. Orr, had filed a motion asking that the city be protected from litigation as it proceeds with its historic bankruptcy filing, made last week.
The state judge, Rosemarie Aquilina, adjourned a hearing in the lawsuit, brought by retired police officers, firefighters and other public employees, until next Monday. Judge Rhodes is expected to decide by then whether the bankruptcy proceedings can continue without interference from such lawsuits.
Mr. Orr and Gov. Rick Snyder contend that Detroit has no options other than bankruptcy to improve its dire financial situation and settle an estimated $18 billion in debts and other obligations, and Mr. Snyder's office defended the legality of the move on Monday.
"We have full confidence in the legality and constitutionality of the governor's and emergency manager's actions," said Sara Wurfel, a spokeswoman for Mr. Snyder.
Wednesday's hearing will be the first in what is expected to be a long, contentious bankruptcy case.
Bondholders, city employees, retirees and other creditors are poised to fight for whatever payment they can extract from the city, which in addition to its debts has run budget deficits for several years.
Mr. Orr and Mr. Snyder are determined to settle Detroit's debts for pennies on the dollar to revitalize its finances and improve rapidly declining city services.
Legal experts were startled and intrigued that a state judge had taken the unusual step of trying to challenge a federal bankruptcy case.
Generally, the United States Constitution is clear about what happens when federal and state laws are in conflict. The so-called Supremacy Clause gives federal law pre-emptive power, in most cases, over state law. If Judge Rhodes were to follow that interpretation, he would probably order that the Chapter 9 case is protected from most legal challenges under state law.
"It's a close call," said Samuel J. Gerdano, the executive director of the American Bankruptcy Institute.
He noted that Chapter 9 bankruptcy does have a provision that prohibits proposing a bankruptcy plan that violates state law, which in Michigan's case could include making changes to accrued public employee pensions and benefits.
"You have to take it seriously," Mr. Gerdano said. "Michigan has this provision on public pensions, and it's unusual."
He predicted that the federal bankruptcy case would ultimately move forward. "It's going to proceed," he said, adding that there is a possibility that public pensions could be taken out of the bankruptcy equation and preserved.
A ruling by Judge Rhodes that insulated the Chapter 9 case from litigation could also be appealed. "Obviously it will be fought every step of the way," Mr. Gerdano said.
Another expert said the supremacy of federal law might not be cut and dried in this case.
John A. E. Pottow, a law professor at the University of Michigan, said that he was dismissive at first of the state action.
"Now I'm convinced there is a plausible argument," he said, that the federal filing may have infringed on the state Constitution. But he thinks the Chapter 9 case will move forward regardless.
"My hunch is that they are going to find that it's O.K. to file a Chapter 9," he said.
Union officials on Monday expressed confidence that the state law would prevail.
At a news conference in Detroit, the president of the United Auto Workers union, Bob King, said that Mr. Orr never truly tried to negotiate a settlement of retiree pensions as he has claimed.
"Kevyn Orr has not held a single bargaining session with the unions," said Mr. King, whose union represents about 200 city workers. "They have meetings where they just talked at them and not with them."
Mr. King contrasted the discussions with the negotiations between the U.A.W., the federal government, and the bankrupt automakers General Motors and Chrysler.
"With the auto companies we tried to resolve this together," he said. "But Mr. Orr and Mr. Snyder aren't interested in that."
Bill Vlasic reported from Detroit, and John Schwartz from New York.
Anda sedang membaca artikel tentang
Hearing Set for Lawsuit Disputing Detroit’s Bankruptcy Filing
Dengan url
https://dunialuasekali.blogspot.com/2013/07/hearing-set-for-lawsuit-disputing.html
Anda boleh menyebar luaskannya atau mengcopy paste-nya
Hearing Set for Lawsuit Disputing Detroit’s Bankruptcy Filing
namun jangan lupa untuk meletakkan link
Hearing Set for Lawsuit Disputing Detroit’s Bankruptcy Filing
sebagai sumbernya
0 komentar:
Posting Komentar