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, Corporate Transactions & Business
- Locations: Red Bank, NJ, New York City, 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
SPACs Are Back, What You Need to Know
Special purpose acquisition companies (better known as SPACs) appear to be making a comeback. SPAC offerings for 2025 have already nearly surpassed last year’s totals, with additional transactions in the pipeline. SPACs last experienced a boom between 2020–2021, with approximately 600 U.S. companies raising a record $163 billion in 2021. Notable companies that went public […]
Author: Dan Brecher
Short Form Merger: Streamlining the Process for Businesses
Merging two companies is a complex legal and business transaction. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process that involves important corporate governance considerations. A short form merger, in which an acquiring company merges with a subsidiary corporation, offers a more streamlined process. However, […]
Author: Dan Brecher
Tariff Response Options for Small Businesses Facing Financial Distress
The Trump Administration’s new tariffs are having an oversized impact on small businesses, which already tend to operate on razor thin margins. Many businesses have been forced to raise prices, find new suppliers, lay off staff, and delay growth plans. For businesses facing even more dire financial circumstances, there are additional tariff response options, including […]
Author: Brian D. Spector
Common Causes of Partnership Disputes and How to Resolve Them
Business partnerships, much like marriages, function exceptionally well when partners are aligned but can become challenging when disagreements arise. Partnership disputes often stem from conflicts over business strategy, financial management, and unclear role definitions among partners. Understanding Business Partnership Conflicts Partnership conflicts place significant stress on businesses, making proactive measures essential. Partnerships should establish detailed […]
Author: Christopher D. Warren
Businesses Are Facing Financial Headwinds—A Practical Guide
*** The original article was featured on Bloomberg Tax, April 28, 2025 — As a tax attorney who spends much of my time helping people and companies who have large, unresolved issues with the IRS or one or more state tax departments, it often occurs to me that the best service that I can provide […]
Author: Scott H. Novak
President Trump's Termination of Member Gwynne Wilcox
On January 28, 2025, the Trump Administration terminated Gwynne Wilcox from her position as a Member of the National Labor Relations Board (NLRB or the Board). Gwynne Wilcox, a union side lawyer for Levy Ratner, was confirmed to the Board for an original term in 2021 and confirmed again for a successive five-year term expiring […]
Author: Matthew F. Mimnaugh
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.