(AP Photo)
(AP Photo)

A Federal judge has ruled that the city of Detroit is indeed eligible to file for bankruptcy.

FOX Business Network's Jeff Flock reports:

Federal Bankruptcy Judge Steven Rhodes today ruling that the city of Detroit has the right to cut the pensions of municipal workers in its city as part of its bankruptcy reorganization plan. For the first time ever, a Federal judge ruling that a city can do that despite state constitution in Michigan which says pensions for municipal workers shall never be diminished.

The ruling could have large implications across the country for other cities considering bankruptcy filings.

In Detroit, I'm Jeff Flock, FOX News Radio.


FOX News Radio's Jennifer Keiper has more on what's next for Detroit-- plus reaction to the decision:

U.S. Bankruptcy Judge Steven Rhodes still has to be given a plan and says going through Chapter 9 will provide a once proud and prosperous city with a fresh start. Unions, pension funds and retirees-- fearing big cuts, argued that the money they earned was protected under state law. However, Union Attorney Sharon Levine calls the ruling "scary":

Levine: "Because what the judge has done here is he said a state constitution that specifically and expressly protects vested pension benefits can be taken away in bankruptcy."

Emergency Manager Kevyn Orr says he is pleased with the decision.

Jennifer Keiper, FOX News Radio.

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