Judge says Detroit bankruptcy filing was unconstitutional, must be withdrawn

[Odious justice]

21. State laws and const. don't go out the window...but if they contradict the Federal law is supreme.

Like a burrito.

In Stockton, California, there are evolving decisons that center around pensions. Here is the kicker with pensions. Per federal law, a private pension is guranteed by 29 USC 1302(a)- the feds will cover those pensions via the PBGC. But not so with public pensions.

Now, there is a clause in the bankruptcy code that could be raised in the bankruptcy court, and that is usc 943(b) which states that a plan cannot be confirmed (finalized) if it makes the debtor (detroit) do something that is prohibited by law- in this case the law would be Article IX section 24 of the Michigan Constituiton.

However, while there is much to argue, the venue is set in stone- and that would be the Federal courts.



http://www.forbes.com/sites/danielfisher/2013/04/03/muni-bankruptcies-set-up-war-between-pensioners-and-bondholders/