Judge Rules Detroit Can Reduce Retiree Pensions

U.S. Bankruptcy Judge Steven Rhodes has ruled that pensions of city retirees can legally be cut in Detroit’s bankruptcy — a decision that came as a significant surprise to people observing the case, the Detroit Free Press reports.

Rhodes emphasized he won’t necessarily allow pensioncuts to be approved in the city’s final reorganization plan, called a “plan of adjustment.”

Rhodes previously signaled that he planned to decide the issue of whether the pensions can be cut later in the case. But today he said he changed his mind and decided ruling on the issue now would expedite the bankruptcy.

Almost immediately afterward, Michigan Council 25 of AFSCME, the city's largest employee union, filed an appeal to the U.S. District Court for the Eastern District of Michigan. The union also plans to ask Rhodes to allow the case to be sent directly to the 6th Circuit Court of Appeals to expedite the case.