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Detroit Goes Bankrupt, the Largest City to Do So in U.S.

Home Forums General Columbus Discussion Everyday Chit Chat Detroit Goes Bankrupt, the Largest City to Do So in U.S.

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  • #98044
    rus
    rus
    Participant

    Quote:
    DETROIT — Detroit, the cradle of America’s automobile industry and once the nation’s fourth-most-populous city, has filed for bankruptcy, an official said Thursday afternoon, the largest American city ever to take such a course.

    The decision to turn to the federal courts, which required approval from both the emergency manager assigned to oversee the troubled city and from Gov. Rick Snyder, is also the largest municipal bankruptcy filing in American history in terms of debt.

    Not everyone agrees how much Detroit owes, but Kevyn D. Orr, the emergency manager who was appointed by Mr. Snyder to resolve the city’s financial problems, has said the debt is likely to be $18 billion and perhaps as much as $20 billion.

    #546821
    rus
    rus
    Participant

    http://www.usatoday.com/story/news/nation/2013/07/18/detroit-files-for-bankruptcy/2567159/

    The U.S. Bankruptcy Court filing represents perhaps the biggest body blow yet to a faded city that’s now home to barely 700,000 — down from a peak of 1.8 million during the auto industry boom years of the 1950s — and struggles to cope with the abandoned buildings and decaying municipal services.

    The filing listed more than 100,000 creditors and more than $1 billion in estimated liabilities, but Orr has said Detroit’s total financial responsibilities could be as high as $20 billion.

    Because of the stakes involved, and the impact on residents statewide, as well as 30,000 current and retired city workers and Detroit’s ability to stay in business, the case could be precedent setting in the federal judiciary. It could also set an important trajectory for the way troubled cities deal with shrinking populations, dwindling tax bases and large debts from municipal pension systems and government services.

    “I think you’re looking at a very long and protracted bankruptcy,” said Brad Coulter, a managing director at O’Keefe LLC, a turnaround consultancy in the Detroit area. “The fight that’s taking place in Detroit is the fight that’s going to take place around the country as other struggling cities and municipalities come to grips with major financial issues.”

    #546822

    News
    Participant

    Cities Really Are Too Big to Fail
    John Nichols on July 22, 2013

    Does anyone seriously doubt that, if Detroit were a “too big to fail” bank, it would have been bailed out long ago? Or that its pensioners, rather than facing the threat of cruel cuts as part of Michigan Governor Rick Snyder’s scheme to steer the city into brutal bankruptcy proceedings, would instead have pocketed hefty bonuses?

    To ask the question is to answer it.

    READ MORE: http://www.thenation.com/blog/175374/congress-needs-recognize-cities-really-are-too-big-fail

    #546823
    rus
    rus
    Participant

    http://www.nationalreview.com/article/354036/remake-detroit-or-empty-it-james-pethokoukis

    Remake Detroit, or Empty It
    We should restructure its entire government into a free-enterprise zone, or encourage people to leave.

    #546824

    gramarye
    Participant

    Hah! But is it too big to fail or too small to succeed, at this point?

    #546825

    Schoolboy
    Participant

    Yes… I do agree that if cities contributed to political campaigns… then they would be “too big to fail”.

    Might be a wake up call for some of America’s failing cities huh?

    Better start buying up politicians to save their a** like the rest of corporate America.

    Just kidding… sorta.

    I think the real reason they aren’t being bailed out is simple. How many more cities will follow? How about townships, villages, and counties? Who knows maybe an entire state, *cough* California, will declare bankruptcy.

    What does bankruptcy mean for a city anyways? To me in a nutshell it’s a big F U to the people/companies the city owes money too. What assets can Detroit even legally auction off in order to pay off its debts at a fraction of the cost?

    #546826

    Anti
    Member

    Not sure if there is a different thread for this, but thought that some of the forum readers might be interested. It’s about taking a more regional approach to the city involving the suburbs, since apparently the Detroit metro as a whole isn’t doing so poorly.

    #546827

    sirlancelot
    Participant

    Recently, I watched a cable news program that contained a news segment about the Detroit bankruptcy. Immediately following the segment, an ad for Mark Herder’s bankruptcy law practice appeared. Talk about coincidence!

    #546828
    rus
    rus
    Participant

    http://www.freep.com/article/20131203/NEWS01/312030084/Detroit-bankruptcy-eligibility-Steven-Rhodes-Chapter-9-Kevyn-Orr

    Judge rules Detroit eligible for historic Chapter 9 bankruptcy, says pensions can be cut

    The city of Detroit today officially became the largest municipality in U.S. history to enter Chapter 9 bankruptcy after U.S. Bankruptcy Judge Steven Rhodes declared it met the specific legal criteria required to receive protection from its creditors.

    The landmark ruling ends more than four months of uncertainty over the fate of the case and sets the stage for a fierce clash over how to slash an estimated $18 billion in debt and long-term liabilities that have hampered Detroit from attacking pervasive blight and violent crime.

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