Ingham County Circuit Court Judge Asks State of Michigan to Withdraw Bankruptcy Petition

An Ingham County Circuit Court Judge asks the State of Michigan to withdraw its bankruptcy petition ruling  that the filing violates retiree’s state constitutional rights. The State of Michigan Attorney General appeals.

Ruling the governor and Detroit’s emergency manager violated the state constitution, an Ingham County Circuit judge ordered Friday that Detroit’s federal bankruptcy filing be withdrawn.

“It’s absolutely needed,” said Judge Rosemary Aquilina, observing she hopes Gov. Rick Snyder “reads certain sections of the (Michigan) constitution and reconsiders his actions.”

The judge said state law guards against retirement benefits being “diminished,” but there will be no such protection in federal bankruptcy court.

State-level legal skirmishing over the Chapter 9 bankruptcy effort by Snyder and Detroit Emergency Manager Kevyn Orr now will quickly move to the Michigan Court of Appeals.

Attorney General Bill Schuette, on behalf of Snyder, filed an application for Appeals Court consideration of Aquilina’s order an hour after it was issued.

Schuette asked the Appeals Court to put a hold on present and future lower-court proceedings and was planning to seek emergency consideration to expedite the process, said spokeswoman Joy Yearout.

Meanwhile, U.S. Rep. John Conyers Jr., D-Detroit, said Friday that Aquilina’s ruling justifies the need for congressional hearings on whether Detroit is misusing the bankruptcy process to slash retiree pensions and health insurance coverage.

While experts say federal proceedings take precedence, state-level legal maneuvering could delay the process. Pension board attorneys said their pleadings could wind up in federal court, too.

Snyder authorized Thursday’s bankruptcy filing in U.S. District Court in Detroit by Orr and his legal team. That was to set in motion a process in which the court determines whether Detroit qualifies for bankruptcy.

The filing involved a bit of courtroom drama.

With rumors it was imminent Thursday afternoon, attorneys representing the pension boards hurried into Aquilina’s court in Lansing to ask for a temporary restraining order.

But Snyder and Orr beat them by a few minutes. Aquilina, informed by phone, allowed the pension board lawyers to revise their restraining order request, then granted it.

Prior to her ruling on Friday, the judge criticized the Snyder administration and Schuette’s office over their hasty move.

“It’s cheating, sir, and it’s cheating good people who work,” the judge told assistant state Attorney General Brian Devlin. “It’s also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy.”

Southfield attorney John Canzano, representing several pension plan members, said bankruptcies of cities such as Stockton, Calif., have been handled in a way that didn’t compromise pensions.

From The Detroit News: http://www.detroitnews.com/article/20130719/METRO01/307190099#ixzz2Zst1YGaw

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