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Court Suspends Lawsuits Over Detroit Bankruptcy

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Downtown Detroit, looking south on Woodward Avenue. (Credit: Bill Pugliano/Getty Images)

Downtown Detroit, looking south on Woodward Avenue. (Credit: Bill Pugliano/Getty Images)

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DETROIT (WWJ/AP) – The Michigan appeals court has put the brakes on litigation challenging state officials over Detroit’s bankruptcy filing.

The court made brief rulings Tuesday in three lawsuits being handled by Ingham County Judge Rosemarie Aquilina. She says Gov. Rick Snyder acted illegally in approving the bankruptcy because it could jeopardize the pensions of Detroit retirees.

The appeals court ordered a timeout while it determines whether it should take a full appeal from state attorneys.

WWJ Lansing Bureau Chief Tim Skubick says, for the time being, it’s a win for the Snyder administration.

Separately, a federal judge is holding the first hearing Wednesday since Detroit filed for bankruptcy last week. The key issue is whether to allow that litigation to run its course in state courts or simply make it part of the bankruptcy case.

The Michigan Constitution says public pensions “shall not be diminished or impaired.”

Skubick says compromises may be in the works between Detroit pension boards and state-appointed emergency manager, Kevyn Orr.

“Mr. Orr has said publicly that, even though he has filed for bankruptcy, he has indicated that he is willing to negotiate,” Skubick said. “Over the past couple of days some of the unions involved have said, ‘Hey, we wanted to negotiate before they filed for bankruptcy and Mr. Orr didn’t want to do it.’ So there’s back and forth there as well, in addition to some legal maneuvering.”

Skubick said a ruling for the appeals court will come within a week or so.

In approving Detroit’s Chapter 9 filing last Friday, Snyder said there was just no other viable option for the city which has an estimated $18 billion.

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 This material may not be published, broadcast, rewritten, or redistributed.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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