A federal appeals panel that was asked to hear a challenge to Detroit's eligibility for bankruptcy protection said that it will confer with the federal district judge overseeing mediation with city creditors before deciding whether to take the case right away, Bloomberg News reported yesterday. Bankruptcy Judge Steven Rhodes ruled in December that Detroit is eligible for chapter 9 protection and that the Michigan constitution gives municipal pensions the status of contracts that can be altered in bankruptcy. The city's two pension funds filed for a direct appeal to the U.S. Court of Appeals in Cincinnati, bypassing the federal district court. Detroit opposes an immediate appeal, as does the state solicitor general. The city has argued that allowing an appeal will delay progress in mediation. The Michigan attorney general sided with the pension plans, while Rhodes recommended against an appeal at this time. The appeals court notified the parties on Feb. 7 that a three-judge panel will confer with U.S. District Judge Gerald Rosen, who serves as the lead mediator between Detroit and its creditors. The panel said that it will confer with Rosen about the status and time frame for mediation.
