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Detroit bankruptcy threatens pensions

A judge has given Detroit the green light to cut pensions as a way out of the largest municipal bankruptcy in U.S. history, a decision that puts the case in the laps of thousands of retirees who had hoped that the Michigan Constitution would protect them from getting smaller checks...

By ED WHITE | Updated on December 04, 2013
Detroit city workers and supporters protest outside the federal courthouse in Detroit while awaiting the bankruptcy decision, Tuesday, Dec. 3, 2013. (AP Photo/Carlos Osorio)

DETROIT (AP) — A judge has given Detroit the green light to cut pensions as a way out of the largest municipal bankruptcy in U.S. history, a decision that puts the case in the laps of thousands of retirees who had hoped that the Michigan Constitution would protect them from getting smaller checks in their golden years.

Judge Steven Rhodes said the city is eligible to stay in bankruptcy court and scrub $18 billion in debt, with about half of that amount linked to underfunded pensions and health care obligations. But he also warned officials that they’ll need to justify any deep reductions.

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