DETROIT - On Wednesday a bankruptcy judge ruled that a federal judge will determine whether or not Detroit is eligible to file for Chapter 9 municipal bankruptcy.
U.S. Bankruptcy Judge Steven Rhodes made the decision after a 2-hour break in court proceedings.
The city had been asking Rhodes to put a stop to lawsuits that aim to halt the bankruptcy process, especially after an Ingham County judge last week said state officials ignored the constitution and acted illegally in approving the Chapter 9 filing. Wednesday's ruling will put those challenges to a halt until a decision is made.
Judge Rhodes will now determine whether the bankruptcy filing is valid- that process will take 90 days.
Michigan Gov. Rick Snyder signed off on Detroit's bankruptcy on July 18, calling it the only "feasible path" for a city whose population has plummeted to 700,000 from 1.8 million decades ago. Detroit's $18 billion in long-term debt has become an urban millstone.
In March, Snyder appointed a bankruptcy expert, Kevyn Orr, as Detroit's emergency manager. Orr had sweeping powers to reshape city finances but recommended bankruptcy to the governor after failing to reach any significant deals with creditors, including Wall Street bankers and Detroit pension funds. Many of those creditors, however, accused him of being inflexible and believe bankruptcy always was the plan.
Detroit has more than double the population of Stockton, Calif., which had been the largest U.S. city to file for bankruptcy before Detroit trumped it last week.
Sketches by: Jerry Lemenu
Special Coverage: Detroit Bankrupt
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