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December 03, 2013

BREAKING: Judge Rules Detroit Eligible For Bankruptcy

And we have a new city atop the list of Largest US Municipal Bankruptcies. Congratulations Detroit!

$18 BILLION in debt. One city.

U.S. Bankruptcy Judge Steven Rhodes determined the city meets the criteria for bankruptcy, ruling the city is financially insolvent and that the filing was properly authorized. He dismissed challenges to Michigan’s emergency manager law and ruled that pensions are not protected by the state Constitution.

“The case was filed in good faith and should not be dismissed,” Rhodes said.

Rhodes also ruled the city negotiated in good faith with its creditors, a key point of contention in the eligibility fight. The judge was sympathetic to creditors’ complaints that they did not get a reasonable chance to respond to the city’s proposals, but he noted that the sheer number of creditors — more than 100,000 — made it “impracticable” for Detroit to negotiate with them all.

Earlier the judge ruled that municipal worker pensions were not immune from the bankruptcy process. So it looks like the people who helped bleed the city dry with get to live with the results of their greed.

It takes awhile but eventually this is where Democratic rule leads.

Of course it's not just Detroit. No this is going to be the first in some mega-municipal bankruptcies across the country.

Illinois is starting to try and deal with their out of control pension plan.

[Update - Andy] The left is reacting about as calmly and rationally as you'd expect to a judge's mainstream interpretation of Chapter 9 of the U.S. Bankruptcy Code.

Honestly, the bankruptcy process provides Detroit its only (slim) chance for survival as a major city. Without it, the years and years of decline will just continue as it withers away.

The whole idea of the bankruptcy process is to provide an opportunity for a fresh start, and I find it highly instructive that the left would rather see the city's last dollar used to pay a union pension benefit than for it to have a chance at rebirth.

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posted by DrewM. at 11:36 AM

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