A judge inheriting what’s left of Detroit’s bankruptcy case was confronted with a new dispute on Wednesday as attorneys argued about whether some city retirees should qualify for financial aid from the state, the Associated Press reported yesterday. Bankruptcy Judge Thomas Tucker held a hearing to get a status report from parties in the largest public bankruptcy in U.S. history. Detroit emerged from Chapter 9 in December, and Bankruptcy Judge Steven Rhodes, who steered the case, retired. Detroit erased or restructured $7 billion in debt and pledged to spend $1.7 billion over a decade to improve city services. The sacrifices include a 4.5 percent pension cut for roughly 12,000 non-public safety retirees, which kicked in this month, and the elimination of their annual cost-of-living payment. Retirees whose income falls below a certain level can apply for aid from a special $20 million fund administered by the state. But the state is opposing efforts to extend that aid to retirees whose returns from an annuity program harmed the city’s pension fund. Those retirees now are being forced to repay the generous returns as part of the bankruptcy case. Detroit’s general pension fund paid at least 7.9 percent a year on annuities no matter how Wall Street performed. The amount over a 10-year period was pegged at $387 million.
