A municipality in legal limbo: Detroit files for bankruptcy eligibility

For a municipality to be undermined by serious financial trouble, its debts take on an insurmountable nature. With no way to break loose from those debts, its local government could file for bankruptcy eligibility as its saving grace. This is why the city of Detroit decided to file for Chapter 9 bankruptcy petition on July 18.

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The New York Times reveals that the trial over the city’s eligibility for Chapter 9 bankruptcy, feasible or not, provoked varying interpretations of events. On one hand, the lawyers of the financially distressed city claim that unions and retirees are to be blamed for delaying negotiations. On the other hand, unions and retirees believe that the bankruptcy filing was a collaboration of several entities, including Michigan Governor Rick Snyder, to gain and maintain control over the city. Moreover, the unions plead the court to order the disapproval of the bankruptcy as it may reduce retiree benefits.

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As Detroit marches to bankruptcy, its efforts to prove its eligibility for the biggest municipal bankruptcy in US history ended in the Nov. 7 trial. Unfortunately, there was no ruling from the judge on whether Detroit can remain under court protection from creditors who can’t fully challenge the debt restructuring process of the city.

Bloomberg relates that US bankruptcy judge Steven Rhodes will issue a ruling only as soon as Detroit lawyers and their opponents submit their respective legal briefs stating how labor will be potentially affected by his decision. The judge also asked the city and state lawyers to answer allegations against Governor Rick Snyder and emergency manager Kevyn Orr for acting “in bad faith” prior to the filing of the case.

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To pronounce eligibility for bankruptcy, the court needs to see a full proof of the city’s insolvency and acts of good faith when it decided that negotiations with creditors were nothing but futile.

Attorney Evan Granowitz specializes in bankruptcy among other areas. For more information about the subject, visit this Facebook page.

REPOST: Stop-and-frisk judge fights removal from case

Read what Judge Shira Scheindlin fights for from this The Guardian article:

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A US judge has asked an appeals court to reinstate her to a closely watched case regarding the constitutionality of the New York police department's "stop-and-frisk" tactic, saying she was unfairly removed from it a week ago.

In a highly unusual request, US District Judge Shira Scheindlin asked the 2nd US circuit court of appeals to reverse its ruling of 31 October when a three-judge panel removed her from the case, saying she "ran afoul" of the judicial code of conduct in part by granting media interviews.

Two months ago Scheindlin became a hero of civil rights and civil liberties groups when she struck down parts of stop-and-frisk, ruling that it amounted to "indirect racial profiling" that resulted in the disproportionate and discriminatory stopping of black and Hispanic people.

In that ruling she also appointed a federal monitor to oversee changes in NYPD practices.

The city appealed and the appeals court ruling last week to remove her from the case and to freeze her decision was at least a temporary victory for Mayor Michael Bloomberg and the NYPD. The city has argued that stopping, questioning and frisking suspicious people has led to a steep decline in crime rates.

The issue played a role in the campaign for mayor of New York City in which candidate Bill de Blasio, who won in a landslide on Tuesday, blasted stop-and-frisk as unfair.

The three-judge panel's ruling had no implications for the merits of the case and instead was a rebuke of Scheindlin. The judges said they would rule on the merits of the case upon hearing the city's appeal of Scheindlin's ruling next March.

Scheindlin, in the motion filed on Wednesday by her attorney, Burt Neuborne, noted that the judge had never been accused of running afoul of the code of conduct by any of the parties in the case at the district court level, nor in oral arguments before the appeals court.

Moreover the appeals court should have notified Scheindlin in advance that it intended to disqualify her and she should have been given a chance to respond before the ruling was made, her lawyer said in the court brief.

"Since nobody asked for her disqualification, and the disqualification came from the court itself, this is her chance to ask: 'Before you do this to me, let me at least get a chance to explain myself,'" Neuborne told Reuters.

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