Michigan appeals court halts Ingham County judge's rulings that Detroit bankruptcy was improper

[alp227]

Source: Detroit Free Press

The Michigan Court of Appeals has granted a stay of Ingham County Circuit Court Judge Rosemarie Aquilina’s rulings that Detroit’s bankruptcy filing violated the state’s constitution.

The three-judge panel, consisting of Appeals Judges Michael Kelly, Patrick Meter and Stephen Borrello, ruled Tuesday afternoon that the order in three cases involving Detroit’s pension systems and the temporary restraining order against moving forward with the bankruptcy was halted pending the resolution of the case.

The panel’s ruling also prohibits Aquilina from having any further proceedings on the matter pending the resolution of the appeal.

Aquilina ruled last week that the bankruptcy filing should be withdrawn and placed a temporary restraining order against any further bankruptcy proceedings because it violates the state constitution provision which prohibits tampering or diminishing pension benefits. The state Attorney General’s office immediately appealed the ruling.

Read more: http://www.freep.com/article/20130723/NEWS06/307230106/

[Purveyor]

1. And the 'conservative kangaroo court' with uphold the appeals court decision. Spit. eom

[LiberalFighter]

2. Too bad liens can't be placed on those judges.

Should check to see where they have investments and any other crooked connections.

[DallasNE]

3. This Is Highly Unusual

For a court to proceed in this manner. And it is a very brutal way to proceed.

[former9thward]

5. No it is not.

Federal law controls this case and the appeals court knows it. The circuit judge made a political pr ruling. That is why she ordered it sent to Obama.

[DallasNE]

6. This Is Anything But Straightforward

Ordinarily federal law would trump the State Constitution, however once the State has staked a claim then there is the unresolved issue of how the 10th Amendment comes into play. Under Chapter 9 rules the bankruptcy Judge could rule that since the parties are squabbling that the bankruptcy Judge could take control and basically remove the emergency manager from the picture. Or a federal Judge could issue an order based on 10th Amendment limits that kicks it back to the State courts, at lease in part. It will be anything but clean. And it is largely uncharted waters because of the extra layer the State has invested in this with the emergency manager function that negates the role of the elected officials in such matters. This, in other words, could be tied up in the various courts for a long, long time. I found the following to be interesting reading and I don't pretend to fully understand what all it means.

Purpose of Municipal Bankruptcy
The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts. Reorganization of the debts of a municipality is typically accomplished either by extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan.

Although similar to other chapters in some respects, chapter 9 is significantly different in that there is no provision in the law for liquidation of the assets of the municipality and distribution of the proceeds to creditors. Such a liquidation or dissolution would undoubtedly violate the Tenth Amendment to the Constitution and the reservation to the states of sovereignty over their internal affairs. Indeed, due to the severe limitations placed upon the power of the bankruptcy court in chapter 9 cases (required by the Tenth Amendment and the Supreme Court's decisions in cases upholding municipal bankruptcy legislation), the bankruptcy court generally is not as active in managing a municipal bankruptcy case as it is in corporate reorganizations under chapter 11. The functions of the bankruptcy court in chapter 9 cases are generally limited to approving the petition (if the debtor is eligible), confirming a plan of debt adjustment, and ensuring implementation of the plan. As a practical matter, however, the municipality may consent to have the court exercise jurisdiction in many of the traditional areas of court oversight in bankruptcy, in order to obtain the protection of court orders and eliminate the need for multiple forums to decide issues.

[Sgent]

9. All of that is true

but it has to be decided (or at least farmed out to state courts) by the BK judge. A state judge cannot interfere unless asked by the BK judge -- and she did.

[AngryAmish]

13. This is not my field, so if I'm wrong my guess are worth exactly what you paid for them..

I'd bet the case would proceed in BK. The umpire, er bankruptcy judge, would rule on most things except the state constitutional issue. For those he would certify a question along the lines of "Can we constitutionally reduce the pensions" send it to Michigan Supreme Court, have them answer it, then proceed pursuant to MI Supreme Court's answer.

Then the US Court of Appeals gets to deal with it.

[Mr. David]

4. I am siding with Aquilina.

The appeals court is wrong on this.

The bankruptcy is illegal, and should remove Snyder and his emergency crony from touching Detroit or Michigan ever again.

Emergency managers have too much power and are illegally favoring everything for the 1%'ers.

[Morganfleeman]

8. Incorrect

There is nothing illegal about the bankruptcy. This is exactly why Chapter 9 was enacted. The only question is whether state pension obligations can be diminished contrary to the Michigan Constitution, but that in and of itself doesn't bar Detroit from filing Chapter 9. The pensions issue will be for the Federal courts to decide, not Michigan courts. Federal law reigns supreme. Aquilina was wildly off base and exceeded her authority.

[Mr. David]

10. Yes yes, but think about this.

Why is an emergency manager deciding what to do for the city of Detroit, instead of the elected folks who were hired to try to fix the problems? If the mayor thinks that Detroit is bankrupt, then let him do it, not the city emergency manager.

When the Republicans enacted this, it is an overreach, and it still is. It consolidated too much power to one person to decide for the entire city.

No, it's illegal, and the Republicans are doing their part to make sure that the bankruptcy proceeds because the Republicans owes too many favoring the 1%'er.

[sweetapogee]

11. you forgot

to mention the fact that buried under the streets of Detroit, directly under the pot holes and to the left of the few remaining functioning street lights, lies the largest reserves of gold ore known to exist ON THE PLANET!

More food for thought.

[SnakeEyes]

7. Then you are not familiar with

the concept of an automatic stay and Aquilina has no say here.

[mulsh]

12. let the wholesale land theft continue unabaited.

n/t