Michigan is on the verge of enacting a "financial emergency" law. To call it draconian is to understate the case. I can imagine a number of legal problems with the law, but I am no Michigan law expert so I withhold comment on those issues. I was struck by the the potential conflicts between the Michigan law and Chapter 9 of the Bankruptcy Code, which provides municipalities (and other local political units) the opportunity to file for bankruptcy. I'm not sure I have located the actual Michigan law, but if this is it, it does not address the bankruptcy issue. In short, I see nothing in the law that prohibits a municipality (or other covered local political subunits) from filing for bankruptcy protection.That may be because Michigan law already prohibits municipal bankruptcies. I do not know.
Assuming I am correct, the question then becomes, in my view, is the Michigan law still operative against a municipality that has filed for bankruptcy protection. Let's consider the issue on the flip.