Judge orders Orr to withdraw Chapter 9 filing
Ingham County Judge Rosemarie Aquilina says Detroit Emergency Manager Kevyn Orr’s Chapter 9 bankruptcy filing violates the state constitution.
Unions filed for declaratory relief in an emergency hearing July 18 before Judge Aquilina, who said the pensioners should not have been blindsided by the bankruptcy filing just minutes before.
Governor Rick Snyder and Treasurer Andy Dillion are the defendants.
The judge based her ruling on the bankruptcy law requirement that full faith negotiations proceed before going to court. Orr rushed to file just five minutes before the hearing in Aquilina’s courtroom.
“This process shouldn’t have been ignored,” she said, adding that she was concerned about the rush to bankruptcy court.
Judge Aquilina told attorneys that the Michigan Constitution prohibits actions that will lessen the pension benefits of public employees.
In her order, Aquilina wrote:
PA 436 is unconstitutional and in violation of Article 9 Section 24 of the Michigan Constitution to the extent that it permits the Governor to authorize an emergency manger to proceed under Chapter 9 in any manner which threatens to diminish or impair accrued pension benefits; and PA 436 is to that extent of no force or effect.
Aquilina went on to state that the governor is prohibited from authorizing an emergency manager to proceed under Chapter 9.
In her order, Aquilina wrote that Snyder approved Orr’s recommendation without placing any contingencies on a Chapter 9 filing.
She stated that by authorizing Orr to proceed under Chapter 9 to diminish or impair accrued pension benefits, Snyder acted without authority under Michigan law and in violation of Article 9 Section 24 of the Michigan Constitution.
To rectify his “unauthorized and unconstitutional” actions, Snyder must:
- Direct Orr to immediately withdraw the Chapter 9 petition
- Not authorize any further Chapter 9 filings which threatens to diminish or impair accrued pension benefits.
Aquilina added in handwriting: “A Copy of the Order shall be transmitted to President Obama.”
Within hours, Attorney General Bill Schuette had appealed her order to the Michigan Court of Appeals.
Meanwhile, Orr withdrew a list of creditors filed with the U.S. Bankruptcy Court for the Eastern District of Michigan.
Orr and his team “accidentally” included the names and address of all of the city’s employees and retirees among those creditor lists.
Lawyers said a new list with redactions will be filed.