A U.S. Department of Justice attorney yesterday defended the legality of chapter 9 bankruptcy in the second day of hearings addressing legal issues surrounding Detroit's bankruptcy case, Reuters reported yesterday. Municipal bankruptcy does not infringe on states' rights because the state needs to authorize chapter 9 filing by a local government, Matthew Troy, an attorney in the Justice Department's Civil Division, told Bankruptcy Judge Steven Rhodes, who is overseeing the case. A union attorney argued on Tuesday that the bankruptcy process erodes states' accountability under their constitutions by ceding their responsibility for financial management within their borders to the federal bankruptcy court.
