High Stakes in Looming Detroit Legal Battle
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  • kkseattle

    “Every public sector union in the country would then be on notice that underfunded pension programs will ultimately be welshed on by cities and states.”

    Not really. Just because a pension program is underfunded doesn’t mean the city or state can file for bankruptcy. Under the current Bankruptcy Code, states are not permitted to file for bankruptcy at all. A city may file only if its state permits it to do so. Only the city may file; its creditors may not file to put a city into bankruptcy. And in order to be eligible to file, the city must be insolvent (unable to pay its obligations) and must demonstrate that it has made good faith efforts to negotiate with creditors before filing.

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