Detroit pensions may now be on the chopping block.
Money that was supposed to materialize disappeared into thin air–in the lead up to Detroit's filing for bankruptcy last week, a big hole was revealed in the city's pension fund. Kevyn Orr, the city's emergency manager, found $3.5 billion in liabilities in the pension budget.
Prior to that discovery, the fund was believed to be in relative financial health, the one point of financial stability in the city's otherwise crumbling financial situation.
Now, the city will plead its case before a federal bankruptcy court. Orr has said that pensioners and bond owners will have to expect less money than they are legally owed.
Peter Henning, Wayne State University Professor of Law, explains.
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