Detroit bankruptcy court changes rules to make automaker filings more attractive

Hoping to make a local filing more attractive to automakers, the federal bankruptcy court in Detroit is making some changes in the way it handles cases.

Mega-bankruptcies, which would include a filing by Chrysler, Ford or General Motors, are most often filed in the courts in New York City or Delaware, both of which are seen as more “business-friendly” and more willing to throw out union contracts and pension obligations. The Detroit court is seen as being more employee-friendly and the U.S. Sixth Judicial District, which includes Detroit, is generally more protective of healthcare and similar benefits. On the other hand, the district’s judges are have more in-depth understanding of in the auto industry. The bankruptcies of automotive suppliers like Collins & Aikman Corp., Intermet Corp. and Plastech Engineered Products Inc. were all handled in the Detroit court.

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