Michigan Court of Appeals blocks further action in Detroit bankruptcy case

Jul 23, 2013

The Michigan Court of Appeals has blocked further action in three lawsuits filed in Lansing that attempt to stop the Detroit bankruptcy case. The decision comes on the eve of the first hearing before a federal bankruptcy judge.

The Michigan Court of Appeals has stopped any further proceedings in the Ingham County lawsuit while a three-judge panel looks into the case.

The appeals court stayed a judge’s order that the bankruptcy filing be withdrawn, and it ordered the next round of arguments to be filed no later than the close of business Friday.

But it’s possible U.S. Bankruptcy Judge Steven Rhodes will order all lawsuits dealing with Detroit’s bankruptcy to run through his court.

Detroit city employees and pension funds say the bankruptcy filing is contrary to the Michigan Constitution. That’s because the state Constitution has specific protections for public employee pensions that could be reduced by a bankruptcy.