Statement from bankruptcy court on opinion finding Detroit eligible for bankruptcy

The Detroit News on judgement day in Detroit:

Judge Rhodes voided a July 19, 2013 state court judgment declaring P.A. 436 unconstitutional. He found that because the judgment was entered after the bankruptcy case was filed, the state court no longer had jurisdiction. The state court judgment was also void because it was entered in violation of the automatic stay of bankruptcy.

The opinion included the following important findings:

■ Under the Michigan Constitution municipal pension rights are contract rights. Therefore, because the State of Michigan authorized the filing of this case, municipal pension rights in Michigan can be impaired in this bankruptcy case, just like any other contract rights.

■The City was insolvent when it filed bankruptcy.

■The City desires to effect a plan.

■Although the City did not negotiate in good faith with its creditors before filing bankruptcy, the law did not require that in this case because such negotiations were impracticable, mostly due to the very large number of creditors – over 100,000.

■ Based on the totality of the circumstances leading up to the City’s bankruptcy filing, the City filed its bankruptcy petition in good faith.

Judge Rhodes’ written opinion will be issued shortly.

Blue America deals with reality: the guilty only need to look in the mirror.