Two important and very different decisions regarding public pensions were recently issued by the Supreme Court of Illinois and the Supreme Court of New Jersey. These decisions are significant not only for the workers and taxpayers in these States, but also for the owners and insurers of municipal bonds issued in these States.

ILLINOIS

Lest you thought you had heard the end of the Stern v. Marshall debate, two recent circuit court decisions remind us that Stern is alive and influential. In October, the Sixth Circuit weighed in on a bankruptcy court’s constitutional authority where it discharged certain fraudulent debts and awarded damages. In early December, the Ninth Circuit performed a similar constitutional analysis where the bankruptcy court decided a fraudulent transfer action against a noncreditor of the bankruptcy estate.