CHICAGO — A federal appeals court Friday agreed to postpone a series of appeals by labor creditors in the Detroit bankruptcy.
The move came after five groups representing the city's pensioners and retirees asked the Sixth Circuit Court of Appeals on July 31 to postpone a hearing on their appeal of Bankruptcy Judge Steven Rhodes' ruling that the city is eligible for Chapter 9 protection and that the city can cut its pensions.
The circuit court was set to hear oral arguments on the appeals on July 30. The hearing was postponed after the creditors told the court they were working with the city to reach settlements and asked the court to delay the hearing until after the key confirmation plan trial, currently set to begin Aug. 21.
Any decisions by the appeals court could endanger the so-called grand bargain, an $800 million deal that holds together the city's bankruptcy exit plan, the creditors warned.
"We believe that any action by this court other than holding these appeals in abeyance until after the plan confirmation would significantly undermine a sensitive settlement and court-ordered mediation process, and would jeopardize both the city's expeditious emergence from bankruptcy and over $800 million of critical funding commitments from the state of Michigan and other outside sources," attorneys wrote in a letter sent to the court. "Holding the appeals in abeyance also ensures that this court will not unnecessarily decide important state and federal constitutional issues."
In agreeing to the delay, the three-judge circuit court wrote: "Based on the submissions of the parties, these cases are stayed."
Attorneys for the city and the state signed the letter, as did its two pension funds, a retiree committee, and a handful of unions.
