U.S. Bankruptcy Judge Steven W. Rhodes recently ruled that Detroit is eligible for bankruptcy relief, but he also found that public pensions can be reduced during a bankruptcy. Because the issue has little to no precedent, this makes it a hot button topic for other municipalities struggling with crushing pension obligations. In this Law360 article, Patton Hahn notes that, while they may not jump on Judge Rhodes' ruling, those cities and towns will certainly be paying attention as the appeals process moves ahead.
"In cities with similar distress to Detroit that have these big unfunded pensions, they'll be watching it very closely," said Mr. Hahn.
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