The judge has decided to over-rule both objections and that nothing with regard the Chapter 9 process is held up.
- *DETROIT JUDGE OVERRULES OBJECTIONS CLAIMING BANKRUPTCY INVALID
- *DETROIT JUDGE SAYS HE HAS POWER TO GRANT GOVERNOR SUIT IMMUNITY
- *DETROIT BANKRUPTCY FILING IS VALID, FEDERAL JUDGE RULES
- *DETROIT BANKRUPTCY ELIGIBILITY TO BE DECIDED IN FEDERAL COURT
Now, we proceed to the Federal eligibility hearing (whether the city is eligible to proceed with Chapter 9). Remember this took almost a year with Stockton, CA. For now, Unions 0 - Orr 1 but it seems like neither side will be a winner when this is all over (which makes sense as while there is the law and the Obama-law, there is simply no money).
The current plan (for now rejected by creditors) means a 90% loss for muni-worker retirees, 81% loss for unsecured creditors, and a 75% loss for secured creditors.
A federal judge has put a stop to lawsuits threatening Detroit's bankruptcy and declared that he will handle any challenges.
The decision Wednesday after two hours of arguments is a victory for Detroit. A county judge last week said Gov. Rick Snyder ignored the Michigan Constitution and acted illegally in approving the Chapter 9 filing, the largest ever U.S. municipal bankruptcy.
Retirees sued, claiming their pensions are protected by the constitution and are at risk in a bankruptcy.
U.S. Bankruptcy Judge Steven Rhodes suspended any pending lawsuits and barred new ones. He says his court will be the exclusive venue for any legal action regarding the bankruptcy.
And just to show that understand that Detroit will need some form of DIP loan, most likely backed by the US government, here is Lindsey Graham proposal via Bloomberg to block any potential DIP, or otherwise, bailout of Detroit:
- Sen. Lindsey Graham, R-S.C., introduces amendment to ban federal govt from bailing out Detroit or any other municipalities.
- “There is no doubt Detroit has huge problems, but they are facing problems of their own making,” Graham says in e-mailed statement
- Graham’s amendment to Treasury budget bill would ban using federal funds to buy or guarantee any asset from municipal, local or county govts facing default; measure also would prohibit federal govt from issuing lines of credit or giving any financial help to avert bankruptcy
Good luck with that Chapter 9 without any external funding...