Detroit Pensions’ Lawsuit Against Bankruptcy Stayed

July 24 2013 (PLANSPONSOR.com) - A U.S. bankruptcy judge suspended lawsuits challenging Detroit's bankruptcy filing.

Judge Steven Rhodes issued a stay on all litigation related to the bankruptcy, including lawsuits filed against Michigan’s governor, state treasurer and Kevyn Orr, Detroit’s state-appointed emergency manager, Reuters reported. Hours before Orr filed the bankruptcy petition, the General Retirement System and the Police and Fire Retirement System filed a lawsuit to prevent it (see “Pension Systems Oppose Detroit’s Bankruptcy”).

The stay clears the way for Rhodes to decide on procedural matters and determine whether Detroit is eligible to remain in federal bankruptcy court.

According to Reuters, city firefighters, worried that the bankruptcy case will lead to cuts in their retirement benefits, protested outside the court house. Detroit has more than $18 billion of debt and unfunded liabilities, including $5.7 billion in liabilities for health care and other retiree benefits and a $3.5 billion pension liability, the news report said.

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