Detroit Begins Bankruptcy Trial


Flickr CC via Ian Freimuth
The City of Detroit filed for bankruptcy earlier this year after suffering from declining population and tax revenues.  The city is struggling to pay the building debt it owes to public workers expecting pension payments.  Many cities in the United States are facing similar pension crises, and the country is looking to Detroit to see how the drama of a failing system is corrected.

After the bankruptcy was negotiated, a group under Council 25 of the American State, County and Municipal Employees, sued to block the bankruptcy.  The group claims that employees were not counseled on the filing and that the city’s poor finances are not the fault of workers.

The bankruptcy court judge, Steven Rhodes has to determine if the city is eligible to declare bankruptcy, and then oversee plans on how Detroit will get back on track financially.  The plans may conflict with Michigan’s Labor Union-friendly constitution barring pension cuts.  No one has laid out specific details about how to go about cutting pensions, and public workers are restless to know their fate.
Flickr CC via meltedplastic

Attorneys representing Detroit are presenting arguments that are likely to highlight the city’s struggle to keep street lights on or a staffed police force.  Administrators have skipped payments to debtors. 

Thirty-eight cities have declared bankruptcy since 2010.  Detroit is by far the largest that has ever filed.  Jefferson County, Alabama and San Bernadino, California are also actively seeking bankruptcy.

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