Judge Says Detroit May Enter Bankruptcy, Forsake Pensions

The city of Detroit may be able to shed billions in debt, including most of $3.5 billion tied to thousands of pensions for city workers and retirees, after a judge ruled Dec. 3 that it could declare bankruptcy. Judge Steven Rhodes said pensions could be cut because the Michigan constitution did not provide bulletproof protection for employee benefits, though he said he would not “lightly or casually” sign off on pension cut proposals. Employee unions claimed in a November suit that the city’s emergency manager did not negotiate in good faith before declaring bankruptcy. Rhodes agreed, but said the desperate circumstances surrounding Detroit’s case likely made that “impossible.” Rhodes tasked Detroit with submitting a plan to exit bankruptcy by March 1.