Fitch Ratings managing director Amy Laskey talked to Fox Business about how Detroit is a unique story in muniland. Fitch published a research note on the bankruptcy ruling and concluded that Detroit’s ruling would not lead to a “spate” of local bankruptcies in Michigan:
Although the judge ruled that pensions could be adjusted, Fitch does not believe the ruling grants Detroit’s emergency manager unlimited freedom to adjust these obligations. The city must submit a plan of adjustment to the bankruptcy court, which must be deemed ‘fair and equitable’ by the presiding judge. The emergency manager expects to submit the plan to the court by year-end. Fitch does not believe that the judge’s decision on pensions will lead to a spate of additional bankruptcy filings in Michigan.
The New York Times, on the other hand, suggested that the Detroit’s ruling could impact other cities:
The judge, Steven W. Rhodes, dealt a major blow to the widely held belief that state laws preserve public pensions, and his ruling is likely to resonate in Chicago, Los Angeles, Philadelphia and many other American cities where the rising cost of pensions has been crowding out spending for public schools, police departments and other services…
…James E. Spiotto, a lawyer with the firm Chapman & Cutler in Chicago who specializes in municipal bankruptcy and was not involved in the case, said: ‘No bankruptcy court had ruled that before. It will be instructive.’