By Editorial Writer | DECEMBER 4, 2013
U.S. Bankruptcy Judge Steven Rhodes ruled Tuesday that Detroit is indeed bankrupt and can proceed with its Chapter 9 filing. The facts in the case gave him no grounds on which to rule otherwise: The Motor City has an estimated $18 billion in debt and cannot reliably provide even basic services to its residents. Rhodes might as well have declared that the earth was round and the sun rises in the east.
Nevertheless, the lead-up to the decision was fairly suspenseful given that it involved a significant legal precedent: whether federal law has supremacy over state law in bankruptcy matters. The Michigan constitution includes a provision that explicitly forbids trimming state and local government employee pension benefits, as the city is seeking to do under bankruptcy. Most legal experts believed that federal law trumped state law but the issue had been untested in court…..To Read More…..
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