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Spirit of Detroit
A federal bankruptcy judge sided with Detroit emergency manager Kevyn Orr Wednesday, ruling that bankruptcy court, rather than state courts, is where challenges to Detroit's bankruptcy filing will be handled. That doesn't mean he's saying the city is definitely eligible for bankruptcy, let alone whether he'll approve the specifics of Orr's plan. But Judge Steven Rhodes is taking challenges to the bankruptcy filing out of the state courts, where Judge Rosemarie Aquilina had ruled against the bankruptcy filing while strongly criticizing the emergency manager and governor's actions along the way.

Taking challenges to the bankruptcy out of state court is a loss for 21,000 retired city workers:

There are three lawsuits in state courts challenging the bankruptcy. They mostly focus on a provision in the Michigan Constitution that says public pensions "shall not be diminished or impaired." Pensions have not been frozen or reduced in the bankruptcy so far, but officials say there are shortfalls in the funds and that payouts could be at risk.

Sharon Levine, an attorney for a union that represents city workers, urged Rhodes to let those lawsuits run their course. She said there's no federal insurance for public pensions once they're broken, unlike pensions at private employers.

"Our members who participate at most are at or below $19,000 a year. There is no safety net," Levine said.

They worked for years to earn those pensions and now their retirements are thrown into jeopardy, as are those of current Detroit public workers. The latter, at least, have a little more time to plan—but given the state of Detroit, they may have few options. The Michigan state constitution calls for public worker pensions to be protected, but that's clearly not the inclination of Gov. Rick Snyder or anyone doing his bidding. The question now is what a federal bankruptcy judge—not a group renowned for protecting workers—will decide on attempts to steal worker pensions.

Originally posted to Daily Kos Labor on Wed Jul 24, 2013 at 01:18 PM PDT.

Also republished by Daily Kos.

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