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People protest outside the U.S. Courthouse where federal bankruptcy Judge Steven Rhodes is to rule on Detroit's Chapter 9 bankruptcy eligibility December 3, 2013 in Detroit, Michigan. Judge Rhodes ruled that the city is eligible for bankruptcy protection and that pensions can be cut. Detroit is the largest city in U.S. history to file for bankruptcy. How will it's bankruptcy affect California?
A federal judge today ruled that Detroit could proceed with its bankruptcy filing. More significantly, the court also ruled that Detroit could roll back on its pension obligations for retired city workers.
It's the first time a bankruptcy court has handed down such a ruling, essentially nullifying a key component of municipal employee benefits that was once held as inviolable under state laws. Today's ruling has ramifications for bankrupt San Bernardino, which could face a legal showdown with CALPERS--the city's largest creditor--over unpaid pension benefits.
Karol Denniston, a partner at the San Francisco law firm, Schiff Hardin LLP who specializes on municipal restructurings and bankruptcies
Marcia Fritz, President of the California Foundation for Fiscal Responsibility, a nonprofit organization that focuses on public employee retirement benefit issues in California
Robert Glazier, Deputy Executive Officer of External Affairs, CalPERS – California Public Employees’ Retirement System
Terry Brennand, a lobbyist for Service Employees International Union