U.S. Bankruptcy Judge Steven Rhodes interrupted emergency manager Kevyn Orr to ask what he did mean at the meeting in which he used the word "sacrosanct."
STORY: Bankruptcy case hot topic at law seminar
DAY 5: Mich. had no plans to help Detroit financially
"I would say that his (a pensioner's) rights are in bankruptcy now," Orr said in his fourth day of testimony on Detroit's bankruptcy. "I would say that his rights are subject to the Supremacy Clause of the (U.S.) Constitution."
"That's a bit different than 'sacrosanct,' isn't it?" Rhodes said.
The jousting between Rhodes and Orr is one of several testy exchanges that have occurred between the judge who will decide whether Michigan's largest city can proceed with its Chapter 9 bankruptcy petition and the emergency manager with broad powers over the city's finances appointed by Gov. Rick Snyder.
Orr also said he warned those who at the June 10 community meeting that pension benefits had been cut in some bankruptcy cases. At that meeting, Orr told the audience that the state constitution and state case law says that vested pension rights are sacred, unassailable.
Later, Rhodes prevented Orr from testifying further about the U.S. Constitution's Supremacy Clause, which says that federal law trumps state law.
DAY 4: Mich. gov calls bankruptcy right decision
DAY 3: State planned early for bankruptcy
Snyder appointed Orr as Detroit's emergency manager in March. At the time, Orr said bankruptcy was not inevitable.
The city of Detroit filed that largest municipal bankruptcy filing in U.S. history July 18 but now must prove that it is eligible for the leverage that a bankruptcy case gives a city over its creditors. The city has argued that it was running out of money earlier this year and was facing lawsuits from a number of creditors as its! debt and long-term obligations reached $18 billion.
Most of Detroit's unions have challenged the city's ability to seek bankruptcy protection and are fighting to protect the pensions of 23,500 retirees as well as active employees.
DAY 2: Detroit couldn't send out bills on time
DAY 1: City, unions clash on bankruptcy
Several days after Orr's June meeting with retirees, he told creditors that the city's pension funds are underfunded by about $3.5 billion, which would require the city paying $200 million to $350 million annually to bring the balances up where they should be. He also told the creditor group that his restructuring plan didn't include those contributions.
One of the conditions for eligibility is to negotiate in good faith with creditors before filing for bankruptcy.
Creditors have been seeking to prove that Detroit lawyers failed to negotiate in good faith with unions, bondholders and insurers. On Monday, Lynn Brimer, a lawyer representing retired police officers, also suggested that both the city's lead restructuring law firm, Jones Day, and its emergency manager, Orr, planned to file for bankruptcy from the start of their involvement with the city.
Brimer showed Orr e-mail from Feb. 11 that said, "I am not sure that an immediate Chapter 9 is superior. If we can get time, it would be better. The city is not ready for Chapter 9 — at least not the one we would like."
Orr said that e-mail shows that "it might be appropriate to negotiate with creditor," and disagreed that Jones Day viewed bankruptcy as inevitable.
Day 6 live coverage from the federal courthouse in Detroit
Get all the details as they happened from this Twitter blog by Free Press reporters Brent Snavely and Nathan Bomey.
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