Bankruptcy Judge Steven Rhodes will allow leaders of the bankrupt city of Detroit to continue their fight to make about $1.4 billion it borrowed from pension payments disappear from the city's debt, despite protests from two city-controlled entities that were created to borrow that money, the Wall Street Journal reported today. With his ruling on Monday, Judge Steven Rhodes rejected a request to dismiss the lawsuit that Detroit leaders filed in January, which argued that the borrowing deals extended by Wall Street were illegal and shouldn't be repaid. Specifically, city leaders said that the deals led Detroit to borrow more than the state's debt limit, resulting "in the creation of city debt that was not authorized" by state law, according to the lawsuit filed in U.S. Bankruptcy Court in Detroit. The city's lawsuit was filed against two city-created entities that borrowed the money and whose representatives argued for the lawsuit to be dismissed. In earlier court papers, representatives said that the city shouldn't be allowed to sue itself.
