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Recent Victories Put Post-Bankruptcy Detroit on Firm Footing
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Two recent client victories in the Sixth Circuit Court of Appeals put the City of Detroit’s post-bankruptcy recovery on much firmer footing.

The first case began two years ago when some residential customers of the Detroit Water and Sewerage Department filed a complaint in the City of Detroit’s bankruptcy case. They asserted the city should be forced to set water rates based on customers’ income rather than on the cost of providing the service as required by Michigan law. 

On behalf of the city, the Miller Canfield team pointed out that in a Chapter 9 bankruptcy case, Congress made clear that a bankruptcy court does not have the authority to grant the relief sought by the residents and even if it did, the complaint failed to state any valid claims. The Sixth Circuit ruled for the city, unanimously affirming the bankruptcy court’s dismissal of the plaintiffs’ complaint and recommended its opinion for publication.

The second matter involved the city’s confirmed plan of adjustment. Creditors in five different appeals sought to unravel the city’s bankruptcy plan by attacking the “Grand Bargain.” A panel of Sixth Circuit judges dismissed each of these appeals as moot. The appellants then requested that the entire Sixth Circuit hear their arguments. No judge requested a vote on the rehearing petition, and thus the court denied it. 

This is great news because it puts to rest serious challenges that could have undermined the city’s revival. Additionally, the binding precedent brings clarity to areas of the law that had previously been murky and never ruled on by a Circuit Court of Appeals.

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