Make us your home page
Instagram

Today’s top headlines delivered to you daily.

(View our Privacy Policy)

Judge says Detroit can use bankruptcy to confront debt

DETROIT — A federal judge ruled Tuesday that Detroit can use bankruptcy to cut employee pensions and relieve itself of other crushing debts, handing a defeat to the city's unions and retirees and shifting the case into a delicate new phase.

Judge Steven Rhodes, who wondered aloud why the bankruptcy had not happened years ago, said pensions can be altered just like any contract because the Michigan Constitution does not offer bulletproof protection for employee benefits. But he signaled a desire for a measured approach and warned city officials that they must be prepared to defend any deep reductions.

"This once proud and prosperous city can't pay its debts. It's insolvent," Rhodes said in formally granting Detroit the largest public bankruptcy in U.S. history. "At the same time, it also has an opportunity for a fresh start."

Rhodes agreed with unions and pension funds that the city's emergency manager, Kevyn Orr, had not negotiated in good faith in the weeks ahead of the July bankruptcy filing, a key condition under federal law. But he said the number of creditors — more than 100,000 — and a wide array of competing interests probably made that "impossible."

The decision set the stage for officials to confront $18 billion in debt with a plan that might pay creditors just pennies on the dollar and is sure to include touchy negotiations over the pensions of about 23,000 retirees and 9,000 workers. Orr says pension funds are short by $3.5 billion.

Judge says Detroit can use bankruptcy to confront debt 12/03/13 [Last modified: Wednesday, December 4, 2013 12:14am]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Associated Press.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Rays late-night bullpen shuffle: Alvarado, Pruitt down; Kolarek up

    Blogs

    The Rays shuffled their bullpen again after Tuesday's game, sending down struggling LHP Jose Alvarado along with RHP Austin Pruitt to Triple-A Durham, and turning next to LHP Adam Kolarek, who will make his major-league debut at age 28,

  2. Tampa Bay Times honored for top investigative story in Gerald Loeb annual business awards

    Business

    The Tampa Bay Times was a co-winner in the investigative category for one of the highest honors in business journalism.

    Tampa Bay Times current and former staff writers William R. Levesque, Nathaniel Lash and Anthony Cormier were honored in the investigative category for their coverage of "Allegiant Air" in the 60th Anniversary Gerald Loeb Awards for Distinguished Business and Financial Journalism. 
[JAMES BORCHUCK   |   Times

]

  3. Pasco woman gives birth to child fathered by 11 year old, deputies say

    Crime

    A Port Richey woman was arrested Tuesday, nearly three years after deputies say she gave birth to a child fathered by an 11-year-old boy.

    Marissa Mowry, 25, was arrested Tuesday on charges she sexually assaulted an 11-year-old and gave birth to his child. [Hillsborough County Sheriff's Office]
  4. For good of the Rays, Tim Beckham should embrace move to second

    The Heater

    PITTSBURGH — The acquisition of slick-fielding shortstop Adeiny Hechavarria said a lot of things, most notably that the Rays are serious about making in-season moves to bolster their chances to make the playoffs, with a reliever, or two, next on the shopping list.

    PITTSBURGH, PA - JUNE 27:  Tim Beckham #1 of the Tampa Bay Rays celebrates with teammates after scoring during the eighth inning against the Pittsburgh Pirates at PNC Park on June 27, 2017 in Pittsburgh, Pennsylvania. (Photo by Joe Sargent/Getty Images) 700011399
  5. St. Petersburg showdown: Kriseman faces Baker for first time tonight at the Rev. Louis Murphy Sr.'s church

    Local Government

    A standing-room-only crowd packed a Midtown church banquet hall Tuesday to witness the first face-off between Mayor Rick Kriseman and former mayor Rick Baker in what is a watershed mayoral contest in the city's history.

    Former Mayor Rick Baker, left, is challenging incumbent Mayor Rick Kriseman, right, to become St. Petersburg mayor.