Ochadleus v. City of Detroit, Michigan (In re City of Detroit, Michigan)

(6th Cir. Oct. 3, 2016)

The Sixth Circuit affirms the district court’s dismissal of the pensioners’ challenge to the confirmation order entered in the Chapter 9 bankruptcy case filed by the City of Detroit, Michigan. The pensioners filed the action to challenge the plan’s reduction of their benefits. The Court holds that the doctrine of equitable mootness applies. The pensioners did not obtain a stay, the plan has been substantially consummated, and many actions have been undertaken or completed under the plan. Opinion below.

Judge: Batchelder


Author: Matt Lindblom


Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust

(U.S. Sup. Ct. June 13, 2016)

The Supreme Court holds that Puerto Rico is a “State” for purposes of Chapter 9’s pre-emption provision, despite the Code’s definition of “State” excluding Puerto Rico for purposes of defining who may be a debtor under Chapter 9. Thus, Puerto Rico cannot authorize its municipalities to seek relief under Chapter 9 nor enact its own municipal bankruptcy laws. The district court properly enjoined enforcement of the laws enacted by Puerto Rico in 2014, which enabled its public utilities to modify their debts. Opinion below.

2016-06-13 – puerto rico v franklin california tax-free trust

Author: Matt Lindblom

Kentucky Employees Retirement System v. Seven Counties Services, Inc. (In re Seven Counties Services, Inc.)

(Bankr. W.D. Ky. Issued May 30, 2014)

In this lengthy opinion, Judge Lloyd of the Bankruptcy Court for the Western District of Kentucky grants judgment in favor of debtor Seven Counties Services in this adversary proceeding brought against it by Kentucky Employees Retirement System (“KERS”).  The Court also grants the debtor’s motion to reject its executory contract with KERS, permitting it to leave the state retirement system.  The Court concludes that the debtor is not a governmental entity and thus may proceed with its Chapter 11 reorganization.  Opinion below.

2014-05-30 – kers v seven counties services