Detroit public-sector workers, pensioners and residents filed objections on August 19 against the city council's request for bankruptcy protection. They want federal judge Steven Rhodes to block the bankruptcy request by unelected emergency manager Kevyn Orr.
Individual creditors began filing objections in person and by early evening more than 100 had been filed, including by the city's biggest union AFSCME, several smaller city unions and pension schemes.
The creditors said Michigan's emergency manager law, which gives Orr his authority, limits existing pension rights and as a result violates the state constitution. They said Orr did not negotiate in good faith with creditors and has not proved that Detroit is insolvent.
The objection read: “The city, led by its unelected, politically appointed emergency manager ... hastily commenced this unconstitutional, unlawfully authorised chapter nine (bankruptcy) proceeding ... to illegally attempt to slash pension and other post-employment benefit obligations and cram such reductions down the throats of current and former city employees.”
Michigan Attorney-General Bill Schuette, on behalf of city pensioners, said that constitutional protections cannot be stepped on.
“Throughout this bankruptcy process, protections enshrined in the Michigan constitution ... must be honoured, respected and followed,” he said.
That contention will also be part of the objections by the city's two employee pension systems, said Bruce Babiarz, spokesperson for Detroit's Police and Fire Retirement System and General Retirement System. Detroit has about 21,000 retired workers who are owed benefits, with underfunded obligations of about US$3.5 billion for pensions and $5.7 billion for pensioners' health coverage.
The August 19 deadline drew protests outside the federal court in Detroit. About 30 people outside the building said there were no provisions in the chapter nine bankruptcy rules that gave Orr authority to file the bankruptcy petition without consent of the city's elected representatives.
[Reprinted from the Morning Star.]