14 August 2014

"Service Feasibility," Detroit, and Part 1 of a New Article

Go here to read a Bloomberg report that to the effect that Judge Steven Rhodes has recognized the standing of three suburban Michigan counties to challenge the feasibility of Detroit's plan of adjustment. What's the big deal you wonder? Those who understand the intricacies of the Supreme Court's "standing" jurisprudence might be surprised that two parties that are not creditors and thus have no right to vote on Detroit's plan would nonetheless have standing to challenge it. After all, doesn't clause 1 of Section 2 of Article III of the United States Constitution provide that federal courts may hear only "cases and controversies"? And doesn't a case or controversy carry an implicit notion that a party's pecuniary interests are at stake? And if Macomb, Wayne and Oakland counties aren't creditors, then what pecuniary interest justifies their participation in Detroit's bankruptcy? And just what can these counties proffer that relates to the plan's "service feasibility", anyway?

For an answer to the second question go to my recently published first third of an article that will be presented at Campbell Law Review's symposium on municipal bankruptcy in October. The article's working title is Who Bears the Burden? The Place for Participation of Municipal Residents in Chapter 9. You can download it here. The first part of the article tries to answer two questions: To what traditional or contemporary municipal services are residents legally entitled? And how much funding for these legal duties must a plan of adjustment provide? (If you want a running start on the notion of feasibility in municipal bankruptcy, go here to read an article that will be published this fall in the Widener Law Journal: Who Bears the Cost? The Necessity of Taxpayer Participation in Chapter 9.)

For an answer to the first question--Who has standing to object to a plan's feasibility?--well, you'll simply have to wait until the entire article is published. But if you want a hint, recall two things: bankruptcy court's are not Article III courts and the "public rights" doctrine.

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