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Has Bankruptcy Ruling Trumped State Constitution?

DETROIT (WWJ) – Has Tuesday’s bankruptcy ruling effectively opened a “Pandora’s Box”, when it comes to how city and county governments in financial distress might deal with public-sector pension obligations moving forward?

Attorney Patrick McCauley of the firm of Gasiorek, Morgan, Greco and McCauley in Farmington Hills says that Detroit may be come a model for other cities in dire financial straits.

“There is no doubt in my mind that some cities will be looking at this very strategically as a way out,” McCauley said.

Boiled down, the ruling by Judge Rhodes concluded that pensions are essentially nothing more than contractual rights … and that the bankruptcy court, in essence, trumps the Michigan constitution reports WWJ’s Jon Hewett.

“The people who invested sweat, toil and tears on behalf of the city never believing that their pensions were going to be subject to being reduced – I’m sure it’s an incredibly distressing ruling for them.”

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