Thread: Judge orders Detroit to withdraw bankruptcy filing

Judge orders Detroit to withdraw bankruptcy filing

By Chris Isidore @CNNMoney July 19, 2013: 4:23 PM ET


Detroit might have to drop its bankruptcy case if a state court judge's order Friday afternoon is upheld on appeal.

NEW YORK (CNNMoney)

A Michigan Circuit Court Judge ruled Friday that Detroit's bankruptcy filing is unconstitutional and ordered the case be withdrawn from federal bankruptcy court.

But Michigan Attorney General Bill Schuette said in a statement soon after the decision that he intended an immediate appeal to the Michigan Court of Appeals and would seek to block this latest order from taking effect while the appeal is heard.

The order came in response to motions by lawyers for retirees and pension funds for city workers, who argue the state constitution prohibits cutting pension and retirement benefits, as has been proposed in the bankruptcy case.

Related: Detroit files bankruptcy

The order was from Ingham County Circuit Judge Rosemarie Aquilina, the county that includes the state capital of Lansing. Aquilina had been ready to issue an order Thursday that would have blocked the filing in federal bankruptcy court, but the hearing on the motion to do so started five minutes after the bankruptcy case was filed.

Related: Detroit bankruptcy filing came with only 5 minutes to spare


Why Detroit filed for bankruptcy

It's not clear if a state court judge legally can order a party in a federal case to drop that action.

"Obviously there are constitutional issues," said Michael Sweet, a bankruptcy attorney with the California law firm of Fox Rothschild and an expert in municipal bankruptcy cases. "Anyone who thought this case would be resolved quickly was sorely mistaken. There is too much at stake for too many people. Clearly the gloves are coming off."

Detroit became the largest municipal bankruptcy in U.S. history Thursday evening when emergency manager Kevyn Orr filed the case in federal bankruptcy court in Detroit. Orr had been appointed to oversee Detroit's finances by Gov. Rick Snyder.

Snyder authorized the bankruptcy filing. Aquilina's order says that Snyder must now order Orr to withdrawal the case.

http://money.cnn.com/2013/07/19/news/economy/detroit-bankruptcy-order/index.html

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http://www.alipac.us/f9/detroit-bank...tirees-283839/

Confusion in Detroit as judge challenges legality of bankruptcy

Published July 19, 2013FoxNews.com






The ongoing crisis in Detroit took another -- and confusing -- turn Friday after an Ingham County judge ruled the city's historic bankruptcy filing violates the state’s constitution and must be withdrawn.

“I have some very serious concerns because there was this rush to bankruptcy court that didn’t have to occur and shouldn’t have occurred,” Judge Rosemarie Aquilina said Friday in a spate of orders arising from three separate lawsuits.

There was no immediate response from Detroit Emergency Manger Kevyn Orr, who filed the bankruptcy document Thursday, and no indication if city officials planned to take any action in response to Aquilina's ruling.

Aquilina said Michigan’s constitution prohibits actions that will lessen the pension benefits of public employees, including those in the city of Detroit. She added that Gov. Rick Snyder and Orr overstepped their authority and violated state law by proceeding with the bankruptcy filing because they knew the outcome could affect benefits to thousands of Detroit residents.

“Plaintiffs shouldn’t have been blindsided,” and “this process shouldn’t have been ignored,” Aquilina said.

Lawyers representing pensioners and two city pension funds got an emergency hearing with Aquilina Thursday at which she said she planned to issue an order to block the bankruptcy filing. But lawyers and the judge learned Orr filed the Detroit bankruptcy petition in Detroit five minutes before the hearing began.

“Plaintiffs shouldn’t have been blindsided,”

- Judge Rosemarie Aquilina

The bankruptcy petition seeks protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.

FoxNews.com dug into the issue with the help of Fox News legal specialist Courtney Vargas, who says filing the bankruptcy petition does not violate Michigan law.

“The Michigan constitution states that accrued pensions benefits of public employees shall not be diminished or impaired,” she said. She added the argument pensioners are trying to make is that by filing for bankruptcy their benefits will be negatively affected and that the filing was done knowing that.

Vargas believes that the argument doesn't fly because federal law authorizes bankruptcy judges to alter the terms of a pension plan for municipal employees whose municipal employer is undergoing bankruptcy.

“Detroit’s been on a downward path for 60 years,” Michigan Gov. Rick Snyder told Fox Business Network Friday. “It’s time to step up and understand that Detroit is broke. And do to it in a context- to say we’re going to do it in a fair fashion in terms of using bankruptcy as an effective tool.”

The Republican governor added, “I don’t want to be here but now that we’re here let’s do it right in terms of creditors and getting better services to citizens and growing Detroit.”

Aquilina said the Michigan constitution prohibits actions that will lessen the pension benefits of public employees, including those in the city of Detroit. Snyder and Orr violated the constitution by going ahead with the bankruptcy filing, because they know reductions in those benefits will result, Aquilina said.

“We’ve been trying to work with people in good faith in terms of going through this process,” Snyder said. “Kevyn Orr’s done a hundred meetings plus in terms of doing that and the response was to run to court.

"That’s part of the benefits of bankruptcy. You have one form to address all these issues.”

On Thursday, Detroit became the largest city in U.S. history to declare municipal bankruptcy, marking a new low for the once-mighty automotive capital.

Earlier this year,Snyder said Detroit was in a financial emergency and didn’t have a viable way out. The state hired Orr to help stop the hemorrhage.

The city, which was the nation’s fourth-largest in the 1950s, with nearly 2 million residents, has seen its population fall to 700,000 as people fled the area, citing deteriorating city services and rising crime rates.

http://www.foxnews.com/politics/2013/07/19/confusion-in-detroit-as-judge-challenges-legality-bankruptcy/

Judge Invokes Obama in Blocking Detroit Bankruptcy Filing

By ROSS KAMINSKY on 7.19.13 @ 5:08PM


In a transparently political move by a judge who is transparently hoping that our hyper-partisan president will appoint her to a better job, Ingham County (Michigan) Circuit Judge Rosemary Aquilina has ruled that Detroit’s bankruptcy filing violates the state constitution’s prohibition on actions which would “diminish” pension benefits.

My take is that Aquilina will be overruled on appeal based on federal preemption and the absolute necessity of the bankruptcy. In other worse, either the pensions will be diminished some (admittedly large) amount now or even more later.
In her ruling, the judge offered this remarkable statement (according to reporting by the Detroit News), one which should make everyone who believes in the rule of law shudder:

“It’s cheating, sir, and it’s cheating good people who work. It’s also not honoring the president, who took (General Motors and Chrysler) out of bankruptcy.”
Speaking of President Obama, Aquilina said “I know he’s watching this.”
What is this, Venezeula? Cuba? Russia?

A sad and disgusting day for the rule of law in the United States.

http://spectator.org/blog/2013/07/19...ama-in-blockin

JULY 19, 2013 AT 4:37 PM
Schuette appeals Ingham County judge's order to withdraw bankruptcy case

• GARY HEINLEIN
• DETROIT NEWS LANSING BUREAU

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Judge Rosemarie Aquilina (Dale G. Young/The Detroit News)

Lansing — Ruling the governor and Detroit’s emergency manager violated the state constitution, an Ingham County Circuit judge ordered Friday that Detroit’s federal bankruptcy filing be withdrawn.

“It’s absolutely needed,” said Judge Rosemary Aquilina, observing she hopes Gov. Rick Snyder “reads certain sections of the (Michigan) constitution and reconsiders his actions.”

The judge said state law guards against retirement benefits being “diminished” but there will be no such protection in federal bankruptcy court.

State-level legal skirmishing over the Chapter 9 bankruptcy effort by Snyder and Detroit Emergency Manager Kevyn Orr now will quickly move to the Michigan Court of Appeals.

Attorney General Bill Schuette, on behalf of Snyder, filed an application for Appeals Court consideration of Aquilina’s order an hour after it was issued.

Schuette asked the Appeals Court to put a hold on present and future lower-court proceedings and was planning to seek emergency consideration to expedite the process, said spokeswoman Joy Yearout.

While experts say federal proceedings take precedence, state-level legal maneuvering could delay the process. Pension board attorneys said their pleadings ultimately could wind up in federal court, too.

Snyder authorized Thursday’s bankruptcy filing in U.S. District Court in Detroit by Orr and his legal team. That was to set in motion a process, normally taking 30- to 90 days, in which the court determines whether Detroit qualifies for bankruptcy.

The filing involved a bit of courtroom drama.

With rumors it was eminent Thursday afternoon, attorneys representing the pension boards hurried into Aquilina’s court in Lansing to ask for a temporary restraining order.

But Snyder and Orr beat them by a few minutes. Aquilina, informed by phone, allowed the pension board lawyers to revise their restraining order request, then granted it.

Prior to her ruling on Friday, the judge criticized the Snyder administration and Attorney General’s Office over its hasty move to outflank pension board attorneys.

“It’s cheating, sir, and it’s cheating good people who work,” the judge told assistant Attorney General Brian Devlin. “It’s also not honoring the (United States) president, who took (Detroit’s auto companies) out of bankruptcy.”
Aquilina said she would make sure President Obama got a copy of her order.
“I know he’s watching this,” she said, predicting the president ultimately will have to do something to make sure existing city workers’ pension agreements are honored.

Pension board lawyers are contending federal bankruptcy proceedings shouldn’t put city workers’ retirement benefits at risk.

Southfield attorney John Canzano, representing several pension plan members, said bankruptcies of cities such as Stockton, Calif., have been handled in a way that didn’t compromise pensions.

http://www.detroitnews.com/article/2...90099/-1/rss53

http://www.alipac.us/f9/detroit-bank...tirees-283839/

http://www.alipac.us/f19/46-u-s-citi...ruptcy-231939/

http://www.alipac.us/f19/ala-county-...istory-282412/

Originally Posted by JohnDoe2

http://www.alipac.us/f19/ala-county-...istory-282412/

Jefferson County had the same problem Detroit has. Corrupt Democrats that ran the city into the ground financially while lining the pockets of their "friends".

Remember, Congressman John Conyers ( can't call them illegal immigrants) wife, who was sentenced to 3 years in jail for fraud, was on the City Council of Detroit. There was the issue of the money she received in kicjkbacks and as her fiduciary, John Conyers SHARED in the money but remains on the House Judiciary Committee.

Monica Conyers, Wife To John Conyers, Sentenced To 3 Years In Prison For Detroit Bribes

AP / Huffington Post ED WHITE First Posted: 05/10/10 06:12 AM ET Updated: 05/25/11 04:50 PM ET




DETROIT (AP) — A former Detroit city councilwoman was sentenced to more than three years in prison Wednesday for bribery after a federal judge refused to set aside her guilty plea during a stormy court hearing dominated by a dispute over evidence of other payoffs.
As guards cleared the packed courtroom, Monica Conyers yelled that she planned to appeal. The wife of U.S. Rep. John Conyers, D-Mich., wanted to withdraw her guilty plea, suggesting she was the victim of "badgering" last year when she admitted taking cash to support a Houston company's sludge contract with the city.
But U.S. District Judge Avern Cohn, reviewing a transcript of the June hearing, said Conyers had denied any coercion and voluntarily pleaded guilty to conspiracy.
Conyers, 45, is the biggest catch so far in the FBI's wide-ranging investigation of corruption in Detroit city government. Nine people have pleaded guilty, including two former directors of the downtown convention center, and prosecutors have promised more charges are coming.
"Bribery is a betrayal of trust," Cohn told Conyers after announcing a 37-month prison term for her "egregious" crime. She quit the council after pleading guilty in June.
Conyers' plea deal was limited to taking bribes to support a contract with Synagro worth $47 million a year. But the recent trial of her former aide, Sam Riddle, exposed a series of alleged schemes involving others making payoffs to do business at city hall.
Prosecutors said Riddle and Conyers collected $69,500 by shaking people down and urged Cohn to consider the alleged crimes when sentencing her. Defense lawyer Steve Fishman firmly objected and demanded a separate hearing.

Read the rest of the story at:
http://www.huffingtonpost.com/2010/0..._n_494305.html


Conyers's wife pleads guilty

By ALEX ISENSTADT & JOHN BRESNAHAN | 6/29/09


Monica Conyers pleads guilty Friday to federal bribery charges.AP PhotoDIGG/BUZZ IT UP

Monica Conyers, the chairwoman of the Detroit City Council and wife of House Judiciary Committee Chairman John Conyers (D-Mich.), pleaded guilty Friday to federal bribery charges, the latest blow to a city still reeling from the collapse of the U.S. auto industry and the jailing of its former mayor.

Monica Conyers pleaded guilty to conspiracy to commit bribery in connection with a city sludge-hauling scandal. As a member of the Detroit City Council in 2007, Conyers cast the deciding vote in favor of awarding a $1.2 billion contract to Synagro Technologies Inc.

Monica Conyers’s attorney said Friday that she would be sentenced to between 30 and 37 months in federal prison.
John Conyers, who did not attend his wife’s court session, declined to say anything to Capitol Hill reporters about his wife’s guilty plea, but his office later released a statement on the case.
Read the rest of the story at:
http://www.politico.com/news/stories/0609/24261.html


Monica Conyers, wife of John Conyers, owes Neiman Marcus up to $50K



Monica Conyers pleaded guilty to conspiracy to commit bribery. | AP Photo
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By JAKE SHERMAN | 7/19/12 2:16 PM EDT Updated: 7/20/12 10:22 AM EDT

The imprisoned wife of longtime Michigan Democratic Rep. John Conyers owes as much as $50,000 to the ultra-posh retailer Neiman Marcus.

Monica Conyers, the former Detroit city councilwoman who pleaded guilty to charges of conspiring to commit bribery, has from $15,000 to $50,000 in debt on an HSBC Neiman Marcus card, according to financial disclosure forms John Conyers filed with the House of Representatives last week.

Monica Conyers is to be released from prison in May 2013, according to the Bureau of Prisons. The financial disclosure says the debt was incurred in December 2010. Monica Conyers went to prison in the summer of 2010.
John Conyers’s office had no immediate comment.
Conyers, 83, faces a tough race in an August primary against three other Democratic candidates. His new district extends into the Detroit suburbs — new territory for the lawmaker that has served in the House since 1965.
Read the rest of the story at:
http://www.politico.com/news/stories/0712/78731.html