|MARY WILLIAMS WALSH, Farhad Manjoo, whose State of the Art column normally appears on this page, is away.|
A federal bankruptcy judge on Wednesday upended the widely held belief that public workers' pensions have a special status in
The ruling, which came during a hearing on a plan by the
But the decision, by Judge
It echoed a decision made last year by
Calpers had argued that if
''Why should I take that lien seriously?'' he asked a lawyer for Calpers,
He did not dispute that
''The bankruptcy code provides that the lien can be avoided and be treated as an unsecured claim,''
''There are lots of permutations and combinations out there with respect to the art of the possible,'' he said, adding that nothing in the law required any city to give its business to Calpers. ''The whole world is out there.''
In oral arguments on Wednesday,
The issue of cutting pensions was raised by a holdout creditor,
That left Franklin to argue that
In court proceedings in July,
Calpers responded by saying it was part of ''a triangular relationship,'' in which the city, its past and present workers and Calpers worked together, with some interactions governed by contract but the most important activities governed by statute.
He said that
''Those conditions are the opening of the gate,'' he said. ''Once the city passes through the gate, it's what's specified in
In a statement, Calpers said: ''We disagree with the judge's opinion on the issue of pension impairment. This ruling is not legally binding on any of the parties in the
This is a more complete version of the story than the one that appeared in print.
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