U.S. Judge Rules Detroit Eligible For Chapter 9 Protection


DETROIT (UPI) — A Federal bankruptcy court judge ruled Tuesday Detroit is insolvent and eligible for Chapter 9 bankruptcy protection to ward off creditors owed $18 billion.

Judge Steven Rhodes ruled Detroit has the authority to file for protection — in what would be the largest municipal bankruptcy in U.S. history — and chastised the city, saying it had not made a good faith effort to negotiate with creditors, the Detroit Free Press reported.

He said the city gave creditors 30 days to draw up a counter offer, an amount of time that was “simply far too short,” the newspaper said.

The petition for bankruptcy was filed in mid-July.

There was some question whether Rhodes would declare Michigan’s emergency manager law unconstitutional, which would have negated Governor Rich Snyder’s authority to petition for Chapter 9 protection on the city’s behalf, The Detroit News said.

In something of a surprise ruling, Rhodes said the may cut public employees’ pensions, as long as the cuts were fair, the Free Press reported.

“The court finds that Detroit was and is insolvent. The court finds that the city was generally not paying its debts as they became due,” Rhodes said it a verbal announcement Tuesday morning that was expected to be followed up with a 140-page ruling.

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