City of Detroit Files Largest Muni Bankruptcy in History
The Detroit Free Press reported that the City of Detroit filed for Chapter 9 bankruptcy protection, laying the groundwork for a historic effort to bail out a major U.S. city that is sinking under billions of dollars in debt and decades of mismanagement, population flight and loss of tax revenue.
The news has been characterized in the press as being the largest municipal bankruptcy in U.S. history.
The Free Press said the bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.
The paper notes that the city has lost more than half of its population over the past 60 years. In 1950, the city was the fifth largest in the U.S. with a population of about 1.8 million. Today, its population is estimated at just fewer than 700,000.
In a letter attached to the bankruptcy filing, dated July 18, 2013, the governor of the state of Michigan, Richard D. Snyder, provides a four-page rationale for authorizing the emergency manager of the City of Detroit, Kevyn D. Orr and the State Treasurer, Andrew Dillon, to proceed with the filing saying, “Given the facts, the only feasible path to sustainability for the City of Detroit is a filing under chapter 9 of the bankruptcy code.”
To read the Detroit Free Press report click here.
To read the Bankruptcy filing with the governor’s letter attached click here.