Municipal bankruptcies, at least until recently, were a rare phenomenon. Even more rare is a bankruptcy filing of this magnitude. Detroit has $18.5 billion in debt and liabilities that it cannot afford to pay, including $3.5 billion in unfunded pension liabilities.
In a 150-page order earlier this month, Judge Steven W. Rhodes held that Motown was eligible to file for Chapter 9 bankruptcy and more importantly, could restructure or avoid some of its massive pension obligations, despite the Michigan Constitution's protections for pensioners from cuts, as federal bankruptcy law trumps state law.
Both holdings may now head to the Sixth Circuit Court of Appeals, after Judge Rhodes certified his rulings for appeal directly to the appeals court, bypassing the intermediate district court, though as USA Today notes, it'll be up to the Sixth Circuit to decide whether it wants to accept the immediate appeal.