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Judge: Detroit Bankruptcy Move Is Illegal

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DETROIT (WWJ/AP) – A judge is ordering Gov. Rick Snyder to withdraw Detroit’s bankruptcy petition, saying the state is illegally trampling the rights of pensioners.

But the practical impact of the decision is unclear. Once a bankruptcy filing is made, it generally trumps other litigation in state courts.

Ingham County Judge Rosemarie Aquilina’s decision Friday came in a lawsuit filed by Detroit pensioners. The judge had planned an emergency hearing Thursday, but Detroit then filed for bankruptcy protection.

The judge says plaintiffs in the case were “blindsided.”

The attorney general’s office says it will take Aquilina’s order to the state appeals court.

WWJ Legal Analyst Charlie Langton says this is a very complicated issue.  He says Aquilina ruled that the bankruptcy filing amounts to a constitutional violation — but it’s not that simple.

“The problem here is that if she wants to enforce it, [Detroit Emergency Manager] Kevyn Orr is going to run back to federal court and get an order that will stay her decision,” Langton said.

“So, this judge in Ingham County might very well believe that a bankruptcy violates the constitution — with regard to people’s pension rights —  but it’s not going to have any effect in the bankruptcy court,” he said.

This latest comes after Orr on Tuesday delivered a letter to Gov. Snyder, recommending the city file for Chapter 9 protection.  Snyder approved it, and the filing was made Thursday.

Orr was appointed by the state in March to make sense of Detroit’s finances following decades of mismanagement. Snyder said the bankruptcy was 60 years in the making.

Get complete coverage of Detroit’s bankruptcy HERE.

(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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