A U.S. bankruptcy court judge on Wednesday dealt a blow to Detroit’s public employee unions and pension funds opposed to the city’s historic bankruptcy filing by suspending legal challenges in Michigan state courts while he reviews the city’s petition for protection from creditors, Reuters reported yesterday. Bankruptcy Judge Steven Rhodes ordered three lawsuits filed by city workers, retirees and pension funds be halted and extended that stay to suits against Michigan’s governor, treasurer and Detroit’s emergency manager. Rhodes’s action ensures that the only path to fight the city’s chapter 9 bankruptcy petition runs through his courtroom in downtown Detroit. The city’s unions and pension funds had hoped to keep the fight in state court, where they felt Michigan’s constitutional protections of retiree benefits would prevail against efforts by Orr to scale them back. Now, barring an appeal of the Judge Rhodes ruling, their fight likely turns to convincing the judge that Detroit emergency manager Kevyn Orr has not negotiated with them in good faith since he was appointed by state officials in March.
http://www.reuters.com/article/2013/07/24/usa-detroit-idUSL1N0FU14G2013…
In related news, Bankruptcy Judge Steven Rhodes has proposed appointing a federal judge as mediator to hash out the most difficult disputes as the city struggles to resolve more than $18 billion in bond and pension obligations, Reuters reported yesterday. Judge Rhodes has proposed appointing federal judge Gerald Rosen to oversee confidential mediation, if it is needed. The proposal filed on Tuesday was included in a list of issues to be heard on Aug. 2. The proposed mediation order would allow Judge Rhodes to send any matters to Judge Rosen or another mediator of Judge Rosen’s choosing. The mediation sessions would be confidential and protected from discovery, according to the court filing.
http://www.reuters.com/article/2013/07/24/usa-detroit-mediator-idUSL1N0…