Part 3 of a series.

Comment: That headline is a bit of an overstatement. On the face of it, the Bankruptcy Code says unfunded pension liabilities get the same treatment as unsecured bonds. However, negotiation does usually result in preference for pensions, based on the few cases we have. Detroit is not a good precedent for that topic because the major bondholders had an especially weak position.

For a great summary of the Detroit bankruptcy and how municipal bankruptcies get negotiated, read Detroit Resurrected by Nathan Bomey.