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Detroit’s retirement systems request a fast-track course for Bankruptcy appeal

Detroit’s retirement systems are urging the U.S. Sixth Circuit Court of Appeals to put their appeal of the city’s bankruptcy case on a fast-track.

The General Retirement System and the Police and Fire Retirement System told the appeals court today that they are concerned that the city’s reorganization plan could be argued and approved before the appeals court considers the retirement systems argument about whether the city is eligible for bankruptcy.

If the appeals court grants the retirement systems’ request, the entire process in bankruptcy court could grind to a halt until the appeal process is complete. It could also thwart both the city of Detroit and U.S. Bankruptcy Judge Steven Rhodes’s goal of resolving the largest bankruptcy case in U.S. history as quickly as possible.

The retirement systems argue that the fast-track process is necessary to protect retiree pension benefits.

“The proposed plan threatens the accrued pension benefits upon which more than 32,000 active and retired City workers and other beneficiaries rely for their primary — and in many instances only — source of income in retirement,” the retirement systems said in a document filed with the appeals court in Cincinnati, Ohio, on Tuesday.

“The proposed plan would thrust thousands of the more than 20,000 current Detroit retirees into a state of poverty from which they may never recover,” the filing stated.

Rhodes ruled in December that Detroit is eligible for bankruptcy protection.

The retirement systems and other creditors have appealed that ruling and the appeals court accepted the case. However, the appeals court said in February that it would not expedite the case.

Since then, Detroit has filed its “plan of adjustment,” or reorganization plan, in bankruptcy court. In the plan, the city spells out how it plans to reduce pension payments for retirees of both retirement systems — by 26% for general retirees and 6% for police and fire should they go along with plan of adjustment and 32% and 10%, respectively, if they challenge it. Rhodes has scheduled confirmation hearings to begin July 16 and to end no later than Aug. 1.

Detroit’s pension funds want the appeals court to put Rhodes’ hearings on hold until the appeal is considered and have asked the court to schedule hearings for June 16-27.

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