"One thing the state can't do is impair contracts, but you can do that in bankruptcy. Bankruptcy is provided for in the U.S. Constitution. According to the Supremacy Clause, federal law should take precedence over a state constitution,” Professor Juliet Moringiello
recently told reporter Jim Lockwood for an article in the Scranton Times Tribune
titled “Detroit bankruptcy ruling reverberates in Scranton.”
Moringiello, who researches and writes extensively on bankruptcy issues, spent the spring 2010 semester serving as the American Bankruptcy Institute Robert N. Zinman resident scholar outside Washington, D.C. Professor Moringiello has been a frequent commentator in the local and national media on the topic of Harrisburg’s Chapter 9 bankruptcy filing in the past, and in the wake of Detroit’s bankruptcy, she has once again shared her insights.
“Just because pensions can be cut doesn't mean that bonds can't be cut," Moringiello told Anne VanderMey for the Fortune article
“Detroit bankruptcy ruling: Winners and losers.”
The Detroit federal bankruptcy ruling would allow the city to cut union pensions, and the ruling could prove instructive for Scranton as outlined in the Times Tribune article. At issue in the decision was a provision in the Michigan state constitution that pensions could not be reduced.
“To have some opinion on this at least gives people some guidance. Federal law does trump state law,” Moringiello said.Standard Disclaimer for External Links