A bankruptcy judge has ruled that the city of Detroit is eligible for Chapter 9 bankruptcy.
The ruling makes the city the largest municipality in the country to go through the process.
In [U S Bankruptcy Judge Steven Rhodes’] comments from the bench, the judge signaled that he also will allow pensions to cut in Detroit’s bankruptcy. “Resolving this issue now will likely expedite the resolution of this bankruptcy case,” said Rhodes, contending that nothing distinguishes pension debts from other debts despite language in Michigan’s constitution that is meant to protect the government retirement plans.
Judge Rhodes did not say whether or not he would approve a bankruptcy reorganization plan with steep cuts.
What are your thoughts on this latest development?
Will Detroit be able to recover? Is the city just the first in a slew of US cities with a similar fate?
Sound off below!