DETROIT (WWJ/AP) – Federal Judge Steven Rhodes has ruled that the city of Detroit can legally file for bankruptcy — and that pensions can be cut as part of the road to solvency.
That doesn’t mean, however, that city worker pensions will be cut. He said he won’t approve cuts unless the entire plan of adjustment is “fair and equitable.”
Those statement from Rhodes comes as he announced Tuesday that Detroit can develop a plan to get rid of $18 billion in debt in the largest public bankruptcy in U.S. history, a case that ultimately could crack a shield protecting public pensions and also put the city’s extraordinary art collection up for grabs.
The judge also turned away challenges that the Chapter 9 violates the Contracts Clause of the U.S. Constitution and the requirement in the Constitution that bankruptcy laws be “uniform.”
Speaking at a noon news conference, Detroit Mayor Dave Bing said the city is in bad shape, but a lot of numbers being thrown around — for example, that there are 78,000 abandoned houses in the city — are overblown.
He said the bankruptcy process will allow the city to find out exactly what the situation is.
“We’ve gotta get real numbers, because if you don’t have facts it’s very hard to make intelligent, informed decisions,” said Bing. “This bankruptcy gives Detroit a chance to move forward with a clean slate.”