Beatdown of COD Pensioners Commences

[MikeyinBrooklyn]

If the state were forced to pay the city's pension bills, I would do so in legislation dissolving the city's government outright. I would have a state appointed city manager in perpetuity. No sense sending good money after bad.

Although, the US Constitution makes clear that federal law does trump state law where they are in conflict; US Bankruptcy law would need to be deemed unconstitutional in order for the judge to allow the state constitution to be followed over federal bankruptcy law.

[Locke09]

Although, the US Constitution makes clear that federal law does trump state law where they are in conflict; US Bankruptcy law would need to be deemed unconstitutional in order for the judge to allow the state constitution to be followed over federal bankruptcy law.

Municipal bankruptcy law is not written to trample upon state's rights. That's why Chapter 9 bankruptcy law does not allow the judge to determine what Detroit's plan is. The judge can only approve or reject the plan that is submitted. The plan has to be rejected if it requires the city to do something that is not "lawful". The argument will be that cutting a pension in Michigan is not lawful for the city and therefore cannot be part of any approved plan.

Now if the judge says, but now that you are in bankruptcy, it is lawful, then the retirees will say, "We argued that you should keep Detroit out of bankruptcy or mandate that Detroit can only enter bankruptcy if it doesn't put pensions on the line, so that the city wouldn't be in a position to violate the Constitution. You decided that now was not the time for that argument and it should be raised once Detroit is in bankruptcy [[this assumes of course that the judge is not going to accept those arguments now and is going to let the city go into bankruptcy)"

In other words, if the court uses that federal law vs. State Constitution argument once it allows Detroit to enter bankruptcy, then the judge will have intentionally or unintentionally put the retirees in a Catch-22 situation. You can't argue that point because it hasn't happened yet. Later, you can't argue that point because it's too late. I can't see a judge wanting to do that.

So, I see the pensions being unharmed unless someone can argue that the State Constitution never really intended to protect pensions in municipalities that are in financial trouble.

Just my layperson's opinion.