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University of Pennsylvania Carey Law School

State and Local Government Law

Detroit

2013

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Can Pensions Be Restructured In (Detroit’S) Municipal Bankruptcy?, David A. Skeel Jr. Oct 2013

Can Pensions Be Restructured In (Detroit’S) Municipal Bankruptcy?, David A. Skeel Jr.

Faculty Scholarship at Penn Law

This paper, which was written as a White Paper for the Federalist Society, describes and assesses the question whether public employee pensions can be restructured in bankruptcy, with a particular focus on Detroit. Part I gives a brief overview both of the treatment of pensions under state law, and of the Michigan law governing the Detroit pensions. Part II explains the legal argument for restructuring an underfunded pension in bankruptcy. Part III considers the major federal constitutional objections to restructuring, Part IV discusses arguments based on the Michigan Constitution, and Part V assesses several Chapter 9 arguments against restructuring. None ...