A judge says Detroit is eligible to fix its finances in bankruptcy court.
The ruling Tuesday clears the way for the city to come up with a plan to shed $18 billion in debt. It comes four months after Detroit sought Chapter 9 protection in the largest public filing in U.S. history.
Detroit must propose a plan to Judge Steven Rhodes, although mediators have been meeting privately with the city and creditors with the hope of striking deals.
Unions and Detroit's public pension funds vigorously opposed bankruptcy during a nine-day trial.
They claim emergency manager Kevyn Orr and his team didn't negotiate in good faith before the summer filing, a requirement for a government to be eligible to shed debts under Chapter 9.