Detroit bankruptcy: Ignore the Pensions, pay the investors.
4 replies, posted
[url]http://www.bbc.co.uk/news/business-25203691[/url]
[QUOTE]US bankruptcy judge Steven Rhodes said payments to retired staff, which make up half of the city's liabilities, could be "impaired" as a result.
Detroit is now expected to submit a plan to rid its balance sheet of $18bn (£11bn) of liabilities.
The city filed for bankruptcy protection more than four months ago.
A coalition including retired city employees, police and fire-fighter unions, and others sued in July to block the filing.
However, Mr Rhodes said Detroit's bankruptcy was a "foregone conclusion", adding the city should have probably filed years ago.
Now, the city's emergency manager, Kevyn Orr, is expected to present a plan by the end of this year for how the city will deal with its more than 100,000 creditors.
City officials say they hope Detroit can emerge from bankruptcy by the end of 2014.
Unions and pensioners' groups had argued that they were not given an opportunity to find another solution to a bankruptcy filing. They had also argued that the Michigan state constitution explicitly protects pension benefits from being cut.
Since pension benefits are essentially contracts, that means they are not entitled to any special protection.[/QUOTE]
bah pensioners, they don't even work. they knew the risk, etc, etc.
[quote]Since pension benefits are essentially contracts, that means they are not entitled to any special protection.[/quote]
Wow. What the fuck.
Yeah priorities first!
....
Oh yeah let's shaft the old people that dedicated their lives serving the city, wouldn't want the people who bought high-risk bonds in a failing city to have negative repercussions.
Reuters also reporting
[quote]Detroit is eligible for the biggest municipal bankruptcy in U.S. history because the city is broke and negotiations with its thousands of creditors were unfeasible, a federal judge said on Tuesday in a wide-ranging ruling that also said the city could cut retiree pensions.
The ruling by U.S. Judge Steven Rhodes marks a watershed in the history of Detroit, once the cradle of the U.S. auto industry and now a symbol of urban decay and mismanagement.[/quote]
[quote]Rhodes also said that the city could cut pensions as part of the restructuring, despite the argument that Michigan's constitution protects them from being slashed. However, Rhodes warned he will not rubber-stamp any pension cuts.[/quote]
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