BEIJING, Dec. 4 (Xinhuanet) --

A federal judge has ruled that the U.S. city of Detroit is eligible for bankruptcy protection. But the ruling is likely to hit pensioners hard.

Detroit is the largest U.S. city ever to file for bankruptcy, which would see huge municipal and manufacturing debts written off. Several creditors have already signalled that they plan to appeal.

After nine days of deliberation, U.S. Bankruptcy Judge Steven Rhodes says Detroit is eligible for Chapter 9 bankruptcy protection. He cited financial insolvency caused by years of mismanagement, chronic population loss and a collapse of the middle class.

Tuesday’s decision means the once-thriving manufacturing hub, famous for making cars, can shed billions from over 18 billion U.S. dollars in long-term debt.

But pension funds will suffer. There’s no extra protection for pensioners outside of their contracts, and nothing in the U.S. Constitution to say they have a right to any extra help.

Creditors are not happy about the decision, and neither are the trade unions. Representatives for the city’s largest union, the Federation of State, County and Municipal Employees, immediately filed a notice of appeal following the ruling.

The city of Detroit filed for bankruptcy in July, making it the largest city in U.S. history ever to do so. Before that time, nearly 40 cents of every dollar collected by Detroit was used to pay off debt. The figure could rise to 65 cents without relief through bankruptcy.

(Source: CNTV.cn)