Detroit asks U.S. court to consolidate bankruptcy appeals

Reuters News
Posted: Mar 18, 2014 6:08 PM

(Reuters) - Detroit asked a federal appeals court on Tuesday to consolidate seven cases seeking to overturn a December ruling that found the city was eligible for Chapter 9 municipal bankruptcy protection.

In a motion, Detroit asked the Sixth Circuit U.S. Court of Appeals to force the parties, including the city's two pension funds, labor unions and retiree groups, to file in one lead case or to jointly file a principal brief accompanied by short individual briefs.

"Each of the appellants has the same interest - overturning the bankruptcy court's determination that the city is unconditionally eligible to proceed under chapter 9," Detroit's motion stated. "Moreover, the appellants raise largely the same legal challenges to that determination."

The parties that filed the appeals had mixed reactions to consolidation, according to the city's motion.

If consolidation of the appeals is not granted, the city asked the appeals court to give it more time to respond to the appeals by pushing the deadline the court set earlier this month to June 17 from May 27.

Meanwhile, Detroit's general and police and fire pension funds filed a motion on Tuesday asking the court to speed up the appeals process so that the case would be fully briefed by May 30 instead of sometime in mid-June. Oral arguments would take place sometime between June 16 and 27, according to the motion.

A debt adjustment plan Detroit proposed last month in U.S. bankruptcy court "threatens the accrued pension benefits upon which more than 32,000 active and retired city workers and other beneficiaries rely for their primary — and in many instances only — source of income in retirement," the pension funds' motion said.

It added that if the plan is confirmed by the court, the city is "overwhelmingly likely to seek immediate dismissal of these appeals" on the basis that they are moot.

Judge Steven Rhodes, who is overseeing Detroit's historic bankruptcy case, has scheduled a confirmation hearing on the plan beginning on July 16.

(Reporting by Karen Pierog in Chicago; editing by Matthew Lewis)