Conyers calls for hearings on Detroit’s chapter 9 bankruptcy petition

The top Democrat on the House Judiciary Committee is calling for hearings on Detroit’s bankruptcy petition, news that has spurred debate over cash-strapped cities’ obligations to pension holders.

{mosads}Rep. John Conyers (D-Mich.), who represents part of Detroit, asked the Judiciary chairman to invite testimony on the use of chapter 9 bankruptcy proceedings by cities around the country.

In his letter, Conyers expressed concerns that the bankruptcy petition in Detroit is being “misused to unilaterally abrogate obligations otherwise protected under law, such as pensions, healthcare and other legal obligations, without sufficient legal safeguards.”

“This represents a potentially troubling trend which could not only have a dangerous and irreversible impact on stakeholders … but could have a deleterious effect in Michigan and nationwide,” Conyers wrote to Rep. Bob Goodlatte (R-Va.).

Michigan officials are embroiled in legal wranglings over Detroit’s bankruptcy filing from this week.

A judge ruled Friday that the petition violates the Michigan Constitution because it would violate obligations to pension-holders. Michigan’s attorney general has vowed to appeal that decision.

Conyers noted several specific areas for congressional inquiry, including whether chapter 9 can override pension guarantees made by state constitutions and what it means for retirees when an unelected entity, such as an emergency manager, commences bankruptcy proceedings.

It is possible the House Judiciary Committee could hold a hearing on the issue before the August recess period.