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Detroit’s unions file challenge to city’s bankruptcy filing

By Reuters
Monday, August 19, 2013 15:03 EDT
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Detroit's Emergency Financial Manager Orr talks to members of the media in Detroit
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(Reuters) – Detroit’s unions filed a challenge on Monday to the city’s historic bankruptcy filing, contending that the city has not met key requirements to seek protection from its creditors.

The American Federation of State, County and Municipal Employees Council 25 and other unions said Detroit has not proven it is insolvent and has not negotiated in good faith with its creditors. In a filing with the U.S. Bankruptcy Court in Detroit, the unions also contended that Chapter 9 of the federal bankruptcy code, which governs municipal bankruptcies, violates the U.S. Constitution by encroaching on states’ rights.

The unions’ objection also said Michigan’s emergency manager law, which enabled Detroit to file for bankruptcy on July 18, violates the state constitution because the law does not explicitly protect retirement benefits for public workers.

(Reporting By Karen Pierog; Editing by Chris Reese)

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