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Detroit Eligibility Ruling Expected Next Week

CHICAGO — U.S. Bankruptcy Court Judge Steven Rhodes will issue his decision over Detroit’s eligibility to file for Chapter 9 bankruptcy on Dec. 3.

Rhodes will hand down his decision at a 9 a.m. hearing at the courthouse where he presides in the U.S. Bankruptcy Court for the Eastern District of Michigan Southern Division, according to a filing posted on the case’s docket Monday. “The court will issue a written decision shortly thereafter,” the notice reads.

Attorneys presented closing arguments for more than eight hours earlier this month, ending what amounted to a nine-day trial that centered on whether the city negotiated in good faith with its creditors before its historic bankruptcy filing in July. Final filings were due Nov. 13. To be eligible to enter into bankruptcy, Detroit has to prove that it's insolvent and negotiated in good faith with its creditors or that such negotiations were too difficult. It also has to show that it was legally authorized to file under state law.

Attorneys for the city's unions, pension systems and retirees argued over the course of the trial that city and state officials were intent on filing for bankruptcy in the belief that only federal law would allow them to cut pensions. Good-faith negotiations were not possible in the tight time frame between June 14, when Detroit emergency manager Kevyn Orr unveiled his creditor proposal, and July 18, when he filed for bankruptcy, attorneys said.

More than 140 creditors objected to Detroit’s eligibility to file for Chapter 9 bankruptcy protection by the deadline set by Rhodes.

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