The City of Detroit’s bankruptcy filing could be at risk. Almost a year after the Bankruptcy Court ruled that the city was eligible to proceed through bankruptcy, an appeal of that decision will be heard by the Sixth Circuit Court of Appeals.
Bankruptcy lawyers for both sides likely filed their briefs months ago. The bankruptcy lawyers will now focus on their oral arguments for the hearing in front of the Circuit Court’s panel.
Circuit Courts typically hear cases under a de novo review. That means they are not re-trying the facts of the case, just the law that was applied to the facts found by the lower court.
In order to overturn the Bankruptcy Court’s decision on eligibility, the Circuit Court will have to find a gross overstep by the Bankruptcy Court or a misapplication of the law to approve eligibility.
When you have lots of lawyers and lots of parties and lots of differing views, bankruptcies can get quite complicated.
Well, here’s something that could really complicate Detroit’s bankruptcy:
WDET’s Sandra Svoboda reports that the U.S. Court of Appeals in Cincinnati will hear arguments on July 30 regarding the eligibility of the city’s bankruptcy.
Yes, that’s right. Many thought that issue had come and gone. But nooo.
The hearing in Cincinnati will come two weeks before the confirmation hearing on the Plan of Adjustment in U.S. Bankruptcy Court in Detroit. A ruling against the bankruptcy could really mess things up for proponents of the bankruptcy.
Svoboda writes:
After Bankruptcy Judge Steven Rhodes ruled last year that Detroit’s bankruptcy case could go forward, several groups representing employees and retirees appealed his decision to the Sixth Circuit. In February, that court ruled the appeal could proceed but refused to expedite it as the attorneys had asked. Now the court says it will hold arguments on the issue July 30.
She further writes:
According to terms reached in negotiations and in the “Grand Bargain,” if the two classes of pensioners — police/fire and non-uniform — vote in favor of the plan, they agree not to pursue pending litigation, such as the appeal of the bankruptcy eligibility. Several employee groups who are parties to the appeal have reached agreements with the city as part of the bankruptcy negotiation and have agreed to support the Plan of Adjustment. These include the Police and Fire Retirement System; the General Retirement System; the Official Committee of Retirees; American Federation of State, County and Municipal Employees Council 25; Retired Detroit Police and Fire Fighters Association, the Detroit Retired City Employees Association, the Detroit Police Command Officers Association and the International Union, UAW.
But Svoboda notes that the Retired Police Member Association, the Detroit Fire Fighters Association and the Detroit Police Officers Association could create big problems.
Deadline Detroit: http://www.deadlinedetroit.com/articles/9789/as_things_move_forward_appeals_court_could_complicate_bankruptcy?section_name=Bankruptcy#.U7rAWkBcmTw
