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Right under way to stop debt ridden Detroit from going into bankruptcy.
City workers and retirees are continuing their challenge to the city's chapter nine filing today.
They say using bankruptcy to renegotiate their pensions would be illegal under Michigan State law.
Detroit faces more than 100000.
And has more than three and a half billion dollars in unfunded pension liabilities joining us now is Bob -- -- Fox News legal analyst thanks for being with us.
The morning so the -- public pension funds are suing the Governor Snyder and the city manager or.
They say that this would violate the State's constitution to use bankruptcy to try to reduce the pensions which are supposedly guaranteed.
To rip currents and retired workers and on Friday.
A judge ruled in favor of those workers the state is appealing so what do you think is it legal to use bankruptcy to renegotiate pensions.
Was certainly it's been used before chapter nine bankruptcy petty and is not use a lot in this country but it specifically designed in reference to municipalities government entities such as this.
And what happened is the judge on Friday was a state court judge from what I understand.
And before that ruling came in they filed a chapter nine bankruptcy -- sort of gives that we call preemptive right that's a congressional right that they have through the chapter nine bankruptcy code.
But what you're going to see in this type of thing is everybody posturing.
From the pension holders of the bondholders to concerns of the public employees -- unions it really is going to be a major chess game all of which will be play out of course in the.
Court of law yeah and those taxpayers still.
-- at about 40% of Detroit's revenues go toward retirement benefits.
And to debt accrued to pay for those pensions and they have eighteen.
Billion dollars in debt and really get that money Detroit residents already pay the highest property taxes the highest income taxes.
In the state what other options does Detroit have.
Well this whole process of the reason why the unions are upset everybody else because they feel that this should all -- -- process of negotiations without bond that probably chapter nine.
So what happens -- sex a talked a couple specialist over the weekend who do a lot of chapter nine bankruptcy is because is not a lot that's -- in this country.
And they said Bob look they sit everybody ultimately we'll have to sort of take a seat.
And figure out the priority claims on this it's distinctly different that a Chapter Eleven bankruptcy because of a Chapter Eleven bankruptcy.
The court's more involved.
In chapter nine bankruptcy because it's the government involved that the congressional pet was -- try to let the sovereignty municipalities sort of take care of it themselves but.
What you're going to see here is a lot of these pension funds and creditors.
Looking for the blessings of the court in court orders aren't a lot of these issues and how it's gonna play out honestly -- and this type of bankruptcy could go on for years and the big things going to be what are we gonna do about those men and women.
Who are -- public employees who anticipated receiving these pensions and their only guaranteeing them pull pension I believe they sent to the end of the year.
What in God's -- gonna happen to these people and how it's going to affect their lives and that's a travesty and all this it did not happen overnight.
Yeah they chose these jobs up partly because all of these pension benefits and certain other -- being pulled out from under them and to your next question though you how did this -- we allow this to happen so -- what went wrong how did we get here the Wall Street Journal says quote.
In Detroit unions and creditors -- to perpetuate a borrowed tax spend cycle at the expense of city residents.
The party is over Douglas MacIntyre saying if the residents of Detroit -- to blame any person -- organization.
They only need to look as far as the unions that controlled labor there and the politicians who ran it over the past four decades.
-- Well certainly I may look in the bottom -- what we have government.
And we elect officials.
We have people that are supposed to manage our monies they're supposed to invest the money properly for pensions for security -- public employees.
They're supposed to make sure I grew up in Pittsburgh Pennsylvania it is seven -- this -- the Pittsburgh.
And they -- organize it and believe or not made it a great city because this.
But what we have here.
Decades of mismanagement that people petty and looked the other way.
Nobody wanted to take accountability thinking it's like given somebody that's -- brain tumor at some point it's going to -- come back it's a cancer and now.
Years later people that work for years.
And dedicated their time are going to suffer the consequences.
-- mismanagement and I'm gonna tell you something if there's ever been a time.
That there should be a look at it criminal culpability at some of the actions of these public about some of these officials over the years.
Had mismanaged the government honestly somebody needs to step in because this should not happen.
In our country anymore but other cities are looking at what's gonna happen in Detroit.
Because of what the consequences could be.
And they should be looking at it all right Bob NASA -- so much for joining us.
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