A Michigan judge declared that Detroit's Chapter 9 bankruptcy filing violated the state's constitution and ordered Gov. Rick Snyder to withdraw it.
Circuit Court Judge Rosemarie E. Aquilina in Lansing Friday criticized Mr. Snyder for rushing the filing into court Thursday before she could rule on a bid by city workers and their pension funds to consider an emergency request to block the filing.
“I'm finding the actions that were taken in filing bankruptcy as overreaching and unconstitutional,” she said.
She ordered the governor to direct Detroit emergency manager Kevyn Orr to immediately withdraw the bankruptcy petition. She also said he cannot authorize further filings that would impair or diminish public pension benefits.
Attorney General Bill Schuette applied for permission to appeal the decisions. He also filed a motion to suspend Ms. Aquilina's rulings pending appeal, said Joy Yearout, a spokeswoman for the attorney general, in an e-mailed statement.
Kenneth Klee, the bankruptcy lawyer who spearheaded the bankruptcy restructuring of Jefferson County, Ala., said a state judge can't force Detroit out of federal bankruptcy, even if Mr. Snyder agrees to try to withdraw the petition.
Once Detroit filed the bankruptcy petition, it came under federal jurisdiction and the case cannot be withdrawn, said Mr. Klee, partner at Klee Tuchin Bogdanoff & Stern in Los Angeles. A federal judge would have to agree to dismiss the case, he said.
“If the governor changes his mind, it doesn't matter,” he said. “Not only can't (Ms. Aquilina) do that, but her order may be in contempt of a federal court, and a federal judge can put her in jail.”
Current and retired city workers had asked Ms. Aquilina to issue a temporary restraining order to keep the city from filing for bankruptcy. The bankruptcy petition was filed minutes before the judge was able to rule.
