Judge Denies Appeal of Detroit Pension Cuts

360px-DavidStottsitsamongDetroittowers

A federal judge on Thursday denied an appeal brought by Detroit pensioners, who sought a rollback of the pension cuts levied on retirees during the city’s bankruptcy proceedings.

At the time of the bankruptcy, a majority of city retirees voted to have their pensions cut because they wanted to avoid the possibility of even deeper cuts.

But the group of retirees bringing the appeal argued that the pension-cutting portion of the bankruptcy plan should be retroactively removed entirely.

More from the Detroit Free Press:

Judge Bernard Friedman of the U.S. District Court in Detroit tossed out appeals by city retirees who had asked the federal court to remove pension cuts from the city’s December 2014 bankruptcy settlement with thousands of creditors, deals that helped the city shed $7 billion in debt.

Detroit’s lawyers asked Friedman to reject the appeals, arguing they were “equitably moot,” a legal doctrine that says a bankruptcy exit plan shouldn’t be reopened once it is substantially consummated, because doing so could hinder the success of the plan and harm other parties who’ve reached settlements.

[…]

The retirees had asked the court to remove pension settlements from the final bankruptcy exit plan, arguing that parts of the treatment of pension claims in the bankruptcy violated the U.S. Bankruptcy Code and the Michigan Constitution.

They also argued that the settlement unfairly treated pensioners who received benefits from an annuity savings fund — supplemental extra pension benefits that city workers paid into above their regular pension benefits. The city took back some of the annuity benefits paid out to workers, arguing that they were improperly paid out at the expense of the overall General Retirement System fund.

A representative for the retiree group said they would appeal the ruling to the U.S. 6th Circuit Court of Appeals.

 

Photo credit: “DavidStottsitsamongDetroittowers” by Mikerussell – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

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