Judge Rules That Detroit Bankruptcy Filing Is Unconstitutional

A Michigan judge ruled today that Detroit filing for chapter 9 bankruptcy on Thursday was unconstitutional. Ingham County Circuit Judge Rosemarie Aquilina said the filing must be withdrawn and that, according to the Detroit Free Press, the governor and city emergency manager “must take no further actions that threaten to diminish the pension benefits of City of Detroit retirees.”

The reduction in those particular benefits is at issue here, due to a portion of the Michigan Constitution that reads [PDF]:

“The accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby.”

The judge interpreted this passage to declare the bankruptcy filing unconstitutional, though this piece in the Detroit News argues that it may not be that clear-cut.

Meanwhile, Attorney General Bill Schuette is appealing the decision to the Michigan Court of Appeals and requesting the orders stayed for the time being.


Follow Josh Feldman on Twitter: @feldmaniac

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