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Saturday, August 17, 2019

Mich. AG to defend Detroit pensioners in federal bankruptcy case

By Jessica M. Karmasek | Jul 29, 2013

LANSING (Legal Newsline) -- Michigan Attorney General Bill Schuette said Saturday he will join the city of Detroit's federal bankruptcy case, defending city pensioners who are at risk of losing their benefits.

"Detroit's $20 billion indebtedness is simply staggering. Equally staggering is the financial uncertainty of pension benefits relied upon by Michigan seniors living on fixed incomes and anticipating a safe and secure retirement after a lifetime of work," the attorney general said in a statement.

"Retirees may face a potential financial crisis not of their own making, possibly a result of pension fund mismanagement."

Schuette said Michigan's constitution is "crystal clear" in stating that pension obligations may not be "diminished or impaired."

Detroit filed for Chapter 9 bankruptcy July 18, making it the largest municipal bankruptcy filing in the U.S. by debt. It's also the largest city by population in U.S. history to file for Chapter 9.

Soon after, a Michigan judge ruled the filing violated the state constitution and ordered Gov. Rick Snyder to withdraw the filing immediately.

However, an appeals court stayed the circuit court's ruling last week, pending future rulings on the attorney general's appeal.

The federal bankruptcy court added its own stay of the state court proceedings.

Snyder hired Detroit Emergency Manager Kevyn Orr, and has defended the bankruptcy filing. Orr has said city retirees will face benefit cuts.

Schuette planned to file an appearance in federal bankruptcy court in his role as the "people's attorney" on behalf of the pensioners Monday.

The attorney general said he will be informing the court that Michigan residents live under a constitution that protects "hard-earned pensions."

And while no court action has been specifically initiated on the issue of pensions at this time, by filing an appearance, Schuette will be able to defend the state constitution if and when this does occur.

The attorney general also noted that he and his office will continue to fulfill its constitutional responsibilities to aggressively represent Snyder and state departments in legal proceedings related to the city's bankruptcy.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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