Union, Retirees Argue Against Detroit Bankruptcy

DETROIT (WWJ/AP) - Lawyers for city unions and retirees are presenting reasons why Detroit's historic bankruptcy request should be denied.

Federal Judge Steven Rhodes holding hearings Tuesday and Wednesday ahead of next week's trial to determine whether Detroit is eligible for bankruptcy.

WWJ Legal Analyst Charlie Langton says, on Tuesday, Rhodes heard challenges from attorneys over whether or not the state of Michigan can authorize Detroit to go bankrupt.

Retiree committee attorney Claude Montgomery says bankruptcy shouldn't be allowed. The committee wants to prevent state-appointed emergency manager Kevyn Orr from cutting municipal pensions as he tries to rid Detroit of $18 billion or more in debt.

Unions and retirees say pensions are protected by Michigan's Constitution, and lawyers argued that the state should be able to figure out its own debt without having the federal courts interfere.

Orr has said federal bankruptcy law supersedes state law.

"Interestingly, though," said Langton, " Judge Rhodes wanted to know if the state would guarantee retirees' pensions since it was the state that authorized the bankruptcy the bankruptcy, and the state has an obligation to uphold its own constitution."

Rhodes said Orr's July 18 bankruptcy petition hasn't resulted in payments being cut and questioned if the pension arguments are premature.

During Tuesday's hearing, a rally was held outside the courthouse.  About 30 protesters carried signs, some calling for Orr's ouster; others saying retirees' rights were violated by the bankruptcy filing.

Orr's filing made Detroit the largest U.S. city to file for Chapter 9 protection.

Hearings will continue this week and next.

[Detroit Bankruptcy: Continuing Coverage]

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