City of Detroit Pension Funds File Lawsuit to Block Bankruptcy Filing

Jul 17, 2013, 19:15 ET from Retirement Systems of the City of Detroit

DETROIT, July 17, 2013 /PRNewswire/ -- The General Retirement System of the City of Detroit and the Police and Fire Retirement System of the City of Detroit (the "Retirement Systems") announced today that they have initiated a civil action against City of Detroit Emergency Manager Kevyn Orr and Governor Rick Snyder in the Ingham County Circuit Court, Lansing, Michigan. 

In the suit, the Retirement Systems challenge the authority of the Emergency Manager and the Governor to authorize bankruptcy proceedings for the City of Detroit that would in any way impair the accrued financial benefits of the Retirement Systems' plan participants and beneficiaries, said benefits being protected by Article IX, Section 24 of the Michigan Constitution of 1963.  By allowing any such impairment, the lawsuit asserts that the Emergency Manager and the Governor would be in violation of their respective oaths of office, which, pursuant to Article XI, Section 1 of Michigan's Constitution, require them to support and uphold the Michigan Constitution.

The Retirement Systems remain fully committed to working cooperatively with the Emergency Manager in his efforts to address the financial condition of the City and have fully cooperated with the Emergency Manager and his team of professionals to date.  However, the Trustees of the Retirement Systems are charged by law to make decisions and take appropriate actions that are solely in the best interests of the plan beneficiaries. The protections of Article IX, Section 24 of the Michigan Constitution represent the express will of the people of the State of Michigan and these protections cannot be subverted by a bankruptcy filing.

"The recent statements regarding an imminent bankruptcy filing, as well as the filing approximately one week ago in Ingham County Circuit Court of similar claims, prompted the Retirement Systems to take more immediate action," said Ron King, a Clark Hill attorney representing both of the Retirement Systems. 

The Retirement Systems have asked the Court for a declaratory judgment that would prevent either the Emergency Manager or the Governor from taking any action which would contravene the protections of Article IX, section 24 of the Michigan Constitution.

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SOURCE Retirement Systems of the City of Detroit