Thomas J. Kelly’s article, "A Method of Protecting Pensions in Chapter 9: Defining the Interest as a Property Right," was recently published in the American Bankruptcy Law Journal. The article discusses the treatment of public pensions in a chapter 9 municipal bankruptcy and concludes that an interest in a public pension, as a contractual right, is modifiable by a bankruptcy court. To avoid this result, the article explores Judge Rhodes’s suggestion that pensioners "somehow create a property interest that bankruptcy would be required to respect under Butner v. United States." The article suggests that pensioners pass a state constitutional amendment defining public pension interests as unmodifiable property rights. These rights would likely be unalterable by a bankruptcy court. While theoretically possible, the article cautions pensioners against seeking full payment of their benefits, for doing so would likely result in plan confirmation issues, increased borrowing costs post-bankruptcy, and decreased revenue for the municipality.
The American Bankruptcy Law Journal is a peer reviewed journal that publishes learned articles focusing on bankruptcy and related subjects. In contrast to the majority of law reviews, manuscripts are only accepted for publication after a double-blind peer review by one of a group of leading bankruptcy scholars. Chief Judge Jeffery A. Deller of the United States Bankruptcy Court for the Western District of Pennsylvania acts as the journal’s Editor in Chief. Mr. Kelly wrote the article during his last semester of law school as part of the King Scholar program. Professor Anne Lawton, a professor of law at Michigan State University College of Law and the current Robert M. Zinman ABI Resident Scholar, was Mr. Kelly’s expert reader.