Bankruptcy Court Rules Detroit Eligible for Chapter 9

At a hearing on December 3, Judge Stephen Rhodes ruled that the City of Detroit was eligible to file for protection under Chapter 9 of the Bankruptcy Code.  While the City filed for bankruptcy back in July and has been conducting a number of bankruptcy-related activities, this ruling officially launches the bankruptcy process.  Later in the week, Judge Rhodes issued a 143-page opinion detailing his analysis.  The analysis was largely based on the facts at hand and a simple application of those facts to the standards for a chapter 9 filing.  Among the Judge’s most noteworthy rulings: because pension rights are contractual rights under the Michigan constitution, they are subject to impairment in a federal bankruptcy proceeding.  Opinion.