CHICAGO -- Detroit's pension funds can file a direct appeal of the federal bankruptcy court decision that the city is eligible for Chapter 9, a process that will run parallel to the city's Chapter 9 case.
The U.S. Court of Appeals for the Sixth Circuit granted the permission Friday.
U.S. Bankruptcy Judge Steven Rhodes approved the direct appeal in December, shortly after his eligibility ruling. The move allows the pension funds to appeal directly with the appeals court and skip the district court level.
The pension funds, joined by some of the city's unions, are appealing Rhodes' ruling that the city is eligible for Chapter 9 and that it can cut pensions in bankruptcy.
Though Detroit's attorneys sought to stave off the appeal when the pension funds and other creditors announced they would pursue it, the city did not block the request to bypass the district court.
Pension fund lawyers argued that the case stands to impact municipal bankruptcies elsewhere.
The pension funds argued in a December court filing that Rhodes' pension ruling "is in conflict with the opinion of the Michigan Attorney General with regard to the protection afforded by the Pensions Clause of the Michigan Constitution, presents significant questions of federal and state constitutional law for which there is no controlling Sixth Circuit authority, and certification would materially advance the progress of this case."
The case ultimately could land before the U.S. Supreme Court.
The appeals court's decision came the same day Detroit is expected to file its plan for debt adjustment with the bankruptcy court.