Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
City Pension Funds Continue to Cause Stir in Detroit Bankruptcy
Author: Joel R. Glucksman
Date: February 7, 2014
Key Contacts
Back
Last July, the city of Detroit filed for protection under federal bankruptcy law, as it had an estimated $18 billion to $20 billion in debt – making it the largest municipal filing in the history of the U.S.
It hasn’t been easy going for Detroit, and its bankruptcy case has met numerous headwinds – many of which result from positions taken by the city’s pension funds. Now, the city has struck back, filing a lawsuit in bankruptcy court to invalidate $1.44 billion in debt sold to fund public worker pensions.
Detroit has asked Judge Steven Rhodes to rule that it is no longer obligated to make payments on the pension certificates of participation, which were issued when Kwame Kilpatrick was mayor. Mr. Kilpatrick is now in federal prison for corruption.
“This deal was bad for the city from its onset despite reassurances it would adequately resolve the city’s pension issues,” Kevyn Orr, Detroit’s state-appointed emergency manager, said in a statement. “We have tried[,] without success, to negotiate a resolution to this dispute and to allow the city and its taxpayers to move forward and unwind these illegal transaction.”
It could be worse for the city’s pension funds though. Under the current proposal for Detroit’s bankruptcy plan of adjustment, the pension claimants are expected to receive a larger distribution on their claims than will the bankers and bondholders. Specifically, Detroit’s plan would provide more money from the city to pension funds than to two large Wall Street Banks – UBS and Bank of America Merrill Lynch. Unfortunately, Judge Rhodes has already turned down two previous proposals to lower the pay-off on the funds owed to these banks.
More to follow, as this battle develops.
- Practices: Bankruptcy & Creditors' Rights
- Locations: Red Bank, NJ, New York City, Washington, D.C., Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business
Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]
Author: Dan Brecher
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1
The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]
Author: Brian D. Spector
How Understanding Bankruptcy Trends Can Benefit Your Business
The bankruptcy legal landscape presents both challenges and opportunities for businesses navigating financial distress. Understanding current bankruptcy trends can help businesses make more informed and strategic decisions. Corporate Bankruptcy Filings Trending Upwards Bankruptcy filings continued to trend upwards in 2024. According to statistics released by the Administrative Office of the U.S. Courts, personal and business […]
Author: Brian D. Spector
SEC Takes Actions Against Issuers for Failure to File Form D
In December, the U.S. Securities and Exchange Commission (SEC) announced charges against two privately held companies for failing to file a Form D notice, which is generally utilized for exempt securities offerings. Here, the SEC’s enforcement sends a strong message: compliance with regulatory requirements is not optional and failure to comply can have significant consequences. […]
Author: Kenneth C. Oh
Redefining Labor Relations: NLRB's Pivot from Abruzzo’s Memoranda
On February 14, 2025, the Office of General Counsel (OGC) of the National Labor Relations Board (NLRB) under Acting General Counsel William B. Cowen issued Memorandum 25-05, “New Process for More Efficient, Effective, Accessible and Transparent Case handling.” The Memorandum rescinds nearly all of the Memoranda issued by his direct predecessor, Jennifer Abruzzo, setting the […]
Author: Matthew F. Mimnaugh
What Are FIRPTA Withholding Requirements?
If you purchase real property from a foreign person or entity, you may be required to withhold taxes from your payment to the seller under the Foreign Investment in Real Property Tax Act (FIRPTA). The federal tax law is designed to ensure that foreign sellers pay any applicable capital gains tax on profits realized from […]
Author: Jesse M. Dimitro
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.