"It would be a significant ruling, and one given the stakes involved would likely find its way to the Supreme Court, because a proceeding in a federal court would presumably be overriding a provision of a state constitution, raising the question of the ability of a federal bankruptcy court to intrude on the sovereignty of a state," says Paul Maco, a partner at Bracewell & Giuliani LLP, and a former director of the SEC's Office of Municipal Securities.
Pensions are a sizable share of the city's $18 billion debt, but there are plenty of other issues the city will have to deal with. The city also faced $5.7 billion in retirees' health care benefits as of 2011, and also estimates that as of June 30, it had $5.3 billion outstanding in revenue bonds, a type of municipal bond.
In addition, there is the problem of restoring growth to a city whose population has dwindled, from more than 1.8 million in 1950 to just around 700,000 in 2010. That decline is bad for both economic growth and city revenues.
Some of Detroit's problems may be unique, but Maco says that one unifying factor across city bankruptcies is the political struggle that goes with readjusting a city's finances.
"Overcoming the differences in political views and personal differences really is going to be a key to moving from getting what you can of what's left to," says Maco. "If properly marshaled, political leadership can make all the difference."