< The 2014 Pension 40: The Battle Is On
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Steven Rhodes
U.S. Bankruptcy Judge
Eastern District of Michigan
PNR
On November 7, U.S. bankruptcy judge Steven Rhodes, 65, approved Detroit’s financial restructuring plan, putting an end to the largest municipal bankruptcy case in U.S. history. The deal prunes $7 billion of debt from the cash-strapped city’s balance sheet over the next decade while protecting public pension obligations from deep cuts — an area of contention for public sector unions since Detroit filed for Chapter 9 bankruptcy protection on July 18, 2013. Rising pension costs played a significant role in the bankruptcy filing. According to Rhodes’s November ruling, the Detroit retirement system will not receive payments from the city until 2024 and instead will rely on contributions from other parties, including nonprofit foundations and the state of Michigan. General beneficiaries will suffer 4.5 percent benefit cuts and will no longer receive annual cost-of-living adjustment, and police and fire pensioners will face reduced COLA increases. Rhodes, who earned a JD from the University of Michigan Law School in 1973 and became a federal bankruptcy judge in 1985, lauds the outcome: “It is a vast understatement to say that the pension settlement is reasonable. It borders on the miraculous.” He admits the pension reductions will cause hardships for creditors and pensioners alike. Detroit officially emerged from bankruptcy on December 10.
The 2014 Pension 40
| 1 | 2 | 3 | 4 | 5 |
| Bruce Rauner Illinois | John and Laura Arnold Laura and John Arnold Foundation | Randi Weingarten American Federation of Teachers | Rahm Emanuel Chicago | David Boies Boies, Schiller & Flexner |
| 6 | 7 | 8 | 9 | 10 |
| Randy DeFrehn National Coordinating Committee for Multiemployer Plans | Damon Silvers AFL-CIO | Laurence Fink BlackRock | Chris Christie New Jersey | Robin Diamonte United Technologies Corp. |
| 11 | 12 | 13 | 14 | 15 |
| Ted Eliopoulos California Public Employees’ Retirement System | John Kline Minnesota | J. Mark Iwry U.S. Treasury Department | Gina Raimondo Rhode Island | Phyllis Borzi U.S. Labor Department |
| 16 | 17 | 18 | 19 | 20 |
| Orrin Hatch Utah | Abigail Johnson Fidelity Investments | Ted Wheeler Oregon | Caitlin Long Morgan Stanley | James Hoffa International Brotherhood of Teamsters |
| 21 | 22 | 23 | 24 | 25 |
| Amy Kessler Prudential Financial | Alejandro García Padilla Puerto Rico | Christopher Klein U.S. Bankruptcy Court for the Eastern District of Caifornia | Steven Rhodes Bankruptcy Court for the Eastern District of Michigan | Kevin de León California |
| 26 | 27 | 28 | 29 | 30 |
| David Draine Pew Charitable Trusts | Jordan Marks National Public Pension Coalition | Sam Liccardo California | Joshua Rauh Stanford Graduate School of Business | Karen Ferguson and Karen Friedman Pension Rights Center |
| 31 | 32 | 33 | 34 | 35 |
| Timothy Blake Moody’s Investors Service | Kathleen Kennedy Townsend Center for Retirement Initiatives, Georgetown University | Edward (Ted) Siedle Benchmark Financial Services | Daniel Loeb Third Point | Judy Mares Employee Benefits Security Administration, U.S. Labor Department |
| 36 | 37 | 38 | 39 | 40 |
| Andrew Biggs American Enterprise Institute | Andy Stern Columbia University | Kenneth Mehlman KKR & Co. | Teresa Ghilarducci New School for Social Research | A. Melissa Moye U.S. Treasury Department |
