A federal judge has approved Detroit's bid to qualify for bankruptcy, putting the city on a path to financial recovery — but threatening the livelihoods of thousands of city workers. In a landmark decision that could harm retiree benefits nationwide, Federal Judge Steven Rhodes ruled that federal bankruptcy law can override state laws that protect public pensions. That clears the way for Detroit to make major cuts to the health and retirement benefits of city employees. The city faces about $18 billion in debt, of which $3.5 billion is pension obligations. Detroit's emergency manager, Kevyn Orr, has told public unions to brace for "significant cuts," but has not laid out details. Workers' pensions in Detroit average around $19,000 per year. By the new year, Orr will present a "plan of adjustment" in bankruptcy court that will clarify how much pensions will be cut. The plan may also include a "fire sale" of city assets that could result in public utilities and the Detroit Institute of Arts collection being bartered off to private bidders. Detroit's bankruptcy filing marks a grim milestone in the decline of what was once the country's fourth-largest city, known as the Motor City, the birthplace of the middle class.