By The Associated Press, Cadwalader.com,
July 29, 2015,
On July 24, 2015, Judge Rita M. Novak of the Circuit Court of Cook County, Illinois struck down recently enacted legislation designed to shore up two of the City of Chicago’s severely underfunded pension plans by, among other things, reducing benefits.1 Judge Novak viewed as controlling a decision by the Illinois Supreme Court from May of this year which held that similar legislation reducing benefits for members of state-funded pension plans violated the “pension protection clause” of the Illinois constitution. (See Cadwalader’s memo on the Supreme Court’s decision here). Unlike the State of Illinois, however, which was left with few options after its own pension reform legislation was struck down in May, Chicago has the potential to access chapter 9 of the United States Bankruptcy Code as a means of achieving pension reform.