TV20's Jorge Avellan was Inside the Courtoom

Judge Rules in Complex Detroit Bankruptcy Case

By Peter Neumann
By Jorge Avellan

December 3, 2013 Updated Dec 3, 2013 at 10:37 PM EDT

DETROIT, Mi. (My TV20 News at 10) --- A Detroit bankruptcy judge has come to decisions in the lawsuit that pitted union pension funds and a city in bankrupty.

Federal Judge Steven Rhodes said the city's Chapter 9 bankruptcy is legal, and can proceed.

Detroit filed for bankrupty, saying it could not pay it's 18-billion dollars in debt -- much of it owed to pension funds of police, firefighters and public workers.

But Rhodes sided with the idea that one month was too brief a period of time for negotiations between the city and its creditors, including union pension funds.

Union pension funds under the city's financial reorganizatiion plan could lose more than half of their value.

Those same unions contested Michigan's Emergency Financial Manager law, that enabled Governor Rick Snyder to appoint Kevin Orr to run the city's finances, including managing recovery from bankruptcy.

In a statement issued after Rhodes' ruling, Orr says he'll be submitting an 'adjustment plan' based the judge's rulings. Orr's target is to have Detroit out of Chapter 9 by the end of September.

Outside the courthouse, several dozen protesters carried signs in support of the unions and againsty the city's bankruptcy declaration. The unions have been pushing for the sale of vast art assets of the Detroit Museum of Art as a way to support pensions funds, an idea Judge Rhodes seemed cool to, saying that wouldn't solve the problem.

Attorneys representing the unions say they'll appeal Juidge Rhodes' rulings.

Our Jorge Avellan was inside the courtroom when the decision was made and will have this story tonight on TV 20 News at Ten. Plus Jorge interviewed retirees and others affected by the decision.

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