US Judge halts lawsuits challenging Detroit bankruptcy

Detroit can proceed with its bankruptcy filing unencumbered by lawsuits that sought to block the largest municipal Chapter 9 in U.S. history, a federal judge ruled Wednesday.

The decision by U.S. bankruptcy court judge Steven Rhodes halts lawsuits by pension funds and creditors, who argue that the bankruptcy violates provisions in Michigan’s constitution that protect public pensions. The judge also ruled that the federal court will decide if Detroit is eligible for Chapter 9 bankruptcy.

The Chapter 9 filing, which is expected to be a long, drawn-out process, will be closely watched by other cities and public pension funds around the country that are also tight on funding amid a weak recovery and a growing number of retiring baby boomers.

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