Bankruptcy judge blocks labor lawsuits against Detroit

By Reuters
Wednesday, July 24, 2013 14:47 EDT
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A vacant blighted home is seen next to a well-kept occupied home on West Grand Boulevard in Detroit, Michigan July 23, 2013. REUTERS/ Rebecca Cook
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DETROIT (Reuters) – A U.S. bankruptcy court judge on Wednesday suspended lawsuits brought in Michigan state courts that had challenged Detroit’s bankruptcy filing on state constitutional grounds while the judge reviews the city’s petition for protection from creditors.

All issues regarding the Detroit bankruptcy case will be heard in federal bankruptcy court, the judge ruled.

Three lawsuits were filed in Lansing, the state’s capital, by city workers, retirees and pension plans arguing that Governor Rick Snyder violated the state’s constitution by approving the filing of a Chapter 9 bankruptcy case by Detroit’s emergency manager, Kevyn Orr, because it threatens to diminish the city’s pension payments.

Judge Steven Rhodes made his ruling after hearing from attorneys for Detroit, which has filed for the largest bankruptcy in U.S. history, and the groups who wanted lawsuits filed in Michigan’s state capital to continue.

(Reporting by Bernie Woodall; editing by Matthew Lewis)

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