Detroit Retirees Sue City to Stop Pension Cuts, And Request to Have PA 436 Repealed

[313WX]

lulz.

Detroit retirees sue to block city from filing for bankruptcy [[and Request to have PA 436 repealed)

http://www.detroitnews.com/article/20130710/METRO01/307100109/Detroit-retirees-sue-block-city-from-filing-bankruptcy?odyssey=tab|topnews|text|FRONTPAGE

[Novine]

Interesting argument. The state constitution protects the pensions. Any actions by the EFM to nullify those pension benefits would seem to be illegal. Can the EFM act contrary to the state constitution based on a law passed by the State Legislature?

[313WX]

Interesting argument. The state constitution protects the pensions. Any actions by the EFM to nullify those pension benefits would seem to be illegal. Can the EFM act contrary to the state constitution based on a law passed by the State Legislature?

But the irony of it all is that by doing this, they're essentially shoving Detroit into bankruptcy themselves, where the courts will treat the state constitution like tissue paper [[and Orr did warn them of this).

[313WX]

And then of course there's the ongoing hypocrisy that an EM was fine when they thought they would simply sock it to those god awful Detroiters with higher taxes and more cuts to services. But now that the Pensions and DIA are at risk, EMs are suddenly evil. And I want PA 436 to be repealed. I don't care if it's repealed in this lawsuit or in one of the three pending federal lawsuits. That way I as a Detroiter will be able to dictate what happens in the proceeding through my newly elected officials.

[mwilbert]

But the irony of it all is that by doing this, they're essentially shoving Detroit into bankruptcy themselves, where the courts will treat the state constitution like tissue paper [[and Orr did warn them of this).

I read it slightly differently--I think the interesting argument here is that state officials like the EM and the Governor can't sign off on Detroit going into bankruptcy because that would threaten vested pensions. Then there is the separate argument that the EM can't reduce vested pensions outside bankruptcy.


The argument that Orr can't do this outside bankruptcy seems reasonable; presumably he is operating under state law. It seems less clear to me that he can't do it under bankruptcy--he wouldn't be doing the reduction, he would only be proposing it as part of an overall plan. The bankruptcy judge would actually be the one imposing the reductions, and as you point out he would not be bound by the state constitution. But can Detroit be prevented from seeking bankruptcy protection on that basis? I find it hard to believe, but not impossible.

[mwilbert]

That way I as a Detroiter will be able to dictate what happens in the proceeding through my newly elected officials.

No, you won't. And I assume you know you won't.

[313WX]

No, you won't. And I assume you know you won't.

Maybe you misunderstood me. What I meant is that the newly elected officials will be the ones to represent the city in a proceeding versus a state-appointed Receiver under PA 436. Only the elected officials can propose a plan of adjustment. If PA 436 were repealed, the state of Michigan would have no legal basis to appoint a receiver to oversee Detroit's bankruptcy, unless Schuette zombifies PA 72 again [[although they can petition the courts for one)

[313WX]

But can Detroit be prevented from seeking bankruptcy protection on that basis? I find it hard to believe, but not impossible.

PA 436 gives Orr authority to file for bankruptcy [[I believe without the Governor's approval). As far as if PA 436 was repealed, I would assume since Michigan would have no legal process for a bankruptcy filing, it would truncate to the federal process for filing bankruptcy.

[Locke09]

But the irony of it all is that by doing this, they're essentially shoving Detroit into bankruptcy themselves, where the courts will treat the state constitution like tissue paper [[and Orr did warn them of this).

Oh, I suppose it might come down to the interpretation of provision 943[[b). The debtor's plan can only be approved if "the debtor is not prohibited by law from taking any action necessary to carry out the plan."

Before you restate that bankruptcy courts don't care about state law, please consider that the bankruptcy code itself was revised in 1937 to ensure that it preserved the sovereign power of states. I don't know how far that goes, but it's not as if the states retain no rights in bankruptcy.

So, if I were a retiree, and the state didn't take action to preserve my pension in accordance with the provisions of the state constitution, by ordering the City to continue to make payments to the pension fund, as the constitution requires, then I would sue the state. You see, bankruptcy court cannot prohibit the state from requiring the city to continue making pension fund payments or continue making any payments for that matter.

The state is willfully abdicating its responsibility to uphold the constitution.

[313WX]

The thing is, those obligations must still be paid by money that doesn't exist. Detroiters sure can't afford to pay them, so that mean the liability will fall on the state. And I can see a scenario where the state of Michigan takes over Detroit's debt obligation. But the question is, will the state do so voluntarily or by a court order. Also, couldn't the state also argue that it's in no position to take on Detroit's debt obligation.

[townonenorth]

I wish that I could just leave this state. From the above discussion, there's no fucking hope to be found here.

[Cincinnati_Kid]

I wish that I could just leave this state. From the above discussion, there's no fucking hope to be found here.

You can leave, what's stopping you? I know plenty of people making plans to move out of this state that is getting too expensive to live in.

[mwilbert]

PA 436 gives Orr authority to file for bankruptcy [[I believe without the Governor's approval). As far as if PA 436 was repealed, I would assume since Michigan would have no legal process for a bankruptcy filing, it would truncate to the federal process for filing bankruptcy.

I wouldn't assume that. It seems more likely the process would revert to its state before both EM laws were enacted, where an EFM could pursue bankruptcy in conjunction with local emergency finance assistance board. But maybe not.

[313WX]

You can leave, what's stopping you? I know plenty of people making plans to move out of this state that is getting too expensive to live in.

Agreed. I plan to leave myself. That plan has been put on hold for a little while though [[unfortunately).

[townonenorth]

You can leave, what's stopping you? I know plenty of people making plans to move out of this state that is getting too expensive to live in.

Money, actually. I think maybe staying in-state and distancing myself from the Detroit and suburbs impending train wreck may be better. With permanent address elsewhere, just enough to avoid the high costs you mention.

[313WX]

Money, actually. I think maybe staying in-state and distancing myself from the Detroit and suburbs impending train wreck may be better. With permanent address elsewhere, just enough to avoid the high costs you mention.

Given that Detroit and the places that depend on its infrastructure and influence in one way or another make up 2/3 of the state, don't think for a second the impact won't be felt in say the UP of Michigan or SW Michigan.

[Wesley Mouch]

lulz.

Detroit retirees sue to block city from filing for bankruptcy [[and Request to have PA 436 repealed)

http://www.detroitnews.com/article/20130710/METRO01/307100109/Detroit-retirees-sue-block-city-from-filing-bankruptcy?odyssey=tab|topnews|text|FRONTPAGE

The best possible result would be no EFM and no bankruptcy. Then the city can just run out of money and let the real chips fall where they may when the checks bounce.

[Hermod]

Money, actually. I think maybe staying in-state and distancing myself from the Detroit and suburbs impending train wreck may be better. With permanent address elsewhere, just enough to avoid the high costs you mention.

Marquette is lovely in the winter.

[compn]

yes, detroit is michigan, like it or not.

need to move out of wayne county for sure tho.
and stay the hell out of oakland co.

[313WX]

The best possible result would be no EFM and no bankruptcy. Then the city can just run out of money and let the real chips fall where they may when the checks bounce.

That will work too. Whatever it takes to end the city vs. suburb, state vs. city, us. vs. them crap and realize that as Detroit goes, so does the state. It may just take bankruptcy for that to happen.

The fact that everyone outside of the city across the state was perfectly ok with what Snyder was doing with the city when they thought it simply meant more cuts to services or tax raises for the citizens [[without shared sacrifice) shows how "good" of a "partner" they were as well.

[corktownyuppie]

The fact that everyone outside of the city across the state was perfectly ok with what Snyder was doing with the city when they thought it simply meant more cuts to services or tax raises for the citizens [[without shared sacrifice) shows how "good" of a "partner" they were as well.

I think that may be an overstatement. My impression with people in the suburbs was not that the EM was going to further cut services. Yes perhaps some whacko hard liners on the right, but most people I know saw this as a bank restructuring...which is why I couldn't understand why people kept crying that the EM is here to screw The People while giving the bank all their money. I hope -- if nothing else -- that it can now be settled that those notions did not turn out to be true.

What is interesting is that not a single party, including the bankers/banksters and pensioners, has contested the fact that Detroit is insolvent. All of the lawsuits from both the unions and the bond insurers are not disputing solvency, rather they are fighting the order of priority in getting funds.

"Yes, judge, we accept that further cuts cannot be made, but clearly we are first in line with whatever money is left," said every creditor in existence.

[noise]

Marquette is lovely in the winter.

Ignoring potential sarcasm, I agree with this. It is very lovely year-round.

[Honky Tonk]

The best possible result would be no EFM and no bankruptcy. Then the city can just run out of money and let the real chips fall where they may when the checks bounce.

Never happen. Obama is getting that bag-O'-cash ready to pay Detroit for it's votes. Here comes the bacon!

[313WX]

I think that may be an overstatement. My impression with people in the suburbs was not that the EM was going to further cut services. Yes perhaps some whacko hard liners on the right, but most people I know saw this as a bank restructuring...which is why I couldn't understand why people kept crying that the EM is here to screw The People while giving the bank all their money. I hope -- if nothing else -- that it can now be settled that those notions did not turn out to be true.

What is interesting is that not a single party, including the bankers/banksters and pensioners, has contested the fact that Detroit is insolvent. All of the lawsuits from both the unions and the bond insurers are not disputing solvency, rather they are fighting the order of priority in getting funds.

"Yes, judge, we accept that further cuts cannot be made, but clearly we are first in line with whatever money is left," said every creditor in existence.

Here's the thing.

Any bank restructuring, especially outside of bankruptcy, will include bringing assets such as the DIA art collection to the table, as well as Pensions of retired workers who now live in West Bloomfield. To sue the city because it wants to cut the pensions or pass legislation to prevent the city from leveraging its art collection comes across as two-faced. Essentially, that's trying to have your cake and let it too.

[Wesley Mouch]

Never happen. Obama is getting that bag-O'-cash ready to pay Detroit for it's votes. Here comes the bacon!

So I get it. The opposition to EFM is really just a believe that money will come. Its not irrational. Has worked for 30 years. Why not a few more.