Detroit’s Unions Contend City’s Bankruptcy Filing

Bankruptcy Detroit - Wallace Spalding Law OfficeIn recent months, the city of Detroit made history by filing for Chapter 9 bankruptcy, creating the biggest case for municipal bankruptcy in U.S. history.

As a bankruptcy attorney in Louisville, Kentucky, I can imagine the ramifications this will have on the local economy of Detroit and am interested to see how the municipality emerges from the situation.

Detroit’s decision to file for Chapter 9 bankruptcy won’t go unchallenged, however. A recent article form NBC News said Detroit’s unions recently filed a challenge, contending that the city has not met key requirements to seek protection from its looming creditors.

The American Federation of State, County and Municipal Employees Council 25 and other unions claim Detroit has not proven that it is insolvent. They also feel the city hasn’t negotiated in good faith with its creditors.

The unions also contended that Chapter 9 of the federal bankruptcy code violates the Constitution by infringing upon state rights.

Also included in the objection was the claim that Michigan’s emergency manager law, which enabled the city to file for bankruptcy on July 18, violates the state’s own laws because it doesn’t explicitly protect retirement benefits for public workers.

Judge Steve Rhodes has scheduled Oct. 23 for the beginning of the hearing to decide if Detroit is eligible for Chapter 9 bankruptcy.

It will be extremely interesting to see how this plays out, as a former manufacturing powerhouse in America is now fighting for protection from its creditors, a list of which fills 3,504 pages (including current, former, and retired workers).

As always, if you are experiencing financial hardships yourself and are considering bankruptcy as an option, consult an experienced bankruptcy attorney right away for guidance.

About Wallace Spalding

Wallace Spalding has concentrated in Bankruptcy Law for over 25 years–helping people relieve the burden of debt and getting the results they deserve. He has been recognized as one of Louisville’s Top Lawyers in Louisville magazine in 2008, 2009, 2011, and 2012. Wallace Spalding's Google+ Profile

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