The largest municipal bankruptcy in U.S. history will have its first day in court Wednesday, even as other lawsuits seek to block a plan to restructure Detroit's more than $18 billion in debt.
On Monday, U.S. Bankruptcy Court Judge Steven Rhodes agreed to the expedited hearing requested by Detroit's emergency manager Kevyn Orr in the wake of a Michigan court judge's order for Orr to withdraw Thursday's Chapter 9 filing on state constitutional grounds.
Orr is seeking to put lawsuits challenging the bankruptcy filings on hold. Concerned that retirement benefits will be slashed, Detroit retirees, workers and pension funds have been running to state court in Michigan's capital of Lansing in an effort to derail the Chapter 9 municipal bankruptcy.
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Ingham County Circuit Court Judge Rosemarie Aquilina on Friday said the state law that allowed Gov. Rick Snyder to approve the bankruptcy filing violated the Michigan constitution. The governor cannot take actions that would violate constitutional protections for retirement benefits for public workers, she said.
Michigan Attorney General Bill Schuette, acting on behalf of Snyder, filed an appeal with the state appeals court asking for immediate consideration. But the appeals court has not yet taken any action on the matter.