Update: Detroit bankruptcy

Detroit’s bankruptcy filing was announced Thursday. Less than 24 hours later, County Judge Rosemarie Aquilina ruled the filing unconstitutional. And while Michigan’s Attorney General Bill Schuette has said he will appeal Aquilina’s ruling, the city itself remains in limbo.

According to Yahoo! News, Aquilina, an Ingram County Circuit Court Judge, found the bankruptcy filing violates the Michigan constitution in that it thwarts provisions that prohibit actions which would lessen pension benefits of public employees. Further, she ordered Gov. Rick Snyder and Emergency Financial Manager Kevyn Orr to withdraw the bankruptcy filing, telling the Detroit Free Press, “I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred.”

Schuette said he will appeal Aquilina’s ruling and seek emergency consideration by the Michigan Court of Appeals. Michigan’s provisions for pension protection do not trump federal bankruptcy law, which does not necessarily offer that same protections to pensioners, according to The Huffington Post. A precedent may have been set by Stockton, Calif., which was approved for bankruptcy in April. In that case, Judge Christopher Klein’s opinion approving the bankruptcy petition noted that bondholders could allege “unfair discrimination” if the pension system’s payments weren’t cut, according to The Huffington Post. That case could go to the Supreme Court.

At a press conference Friday, Snyder and Orr fielded questions, some of which focused on the potential selling of Detroit assets, including art and city parks, to appease creditors. Rumors began circulating that “treasures,” including the Howdy Doody puppet, will soon hit auction blocks to pay down some of the city’s debts.

Orr denied these rumors at the press conference, and, according to Yahoo! News, touted Quicken Loans chairman and Cleveland Cavaliers owner Dan Gilbert and Detroit Tigers and Red Wings owner Mike Ilitch for investing heavily in the city.

At the conference, both Synder and Orr said revitalizing Detroit will involve working with creditors, pension fund managers, civil servants, citizens and government leaders, but offered little by way of specifics. It’s an era of uncertainty for Detroit, but for the present it appears that, on top of its many other woes, the city can now prep for a series of legal battles.

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