Detroit succumbs to bankruptcy, seeks court protection

Article by Anita Panait, on July 19, 2013

The city of Detroit has filed for bankruptcy, becoming the most populous city in the United States to do so. The city is now seeking court protection from creditors as it tries to get rid a budget deficit and reduce its long-term debt. Michigan Governor Rick Snyder has authorized the city's emergency manager, Kevyn Orr, to file the petition. He said in a letter that the bankruptcy petition is “a last resort to return” Detroit to “financial and civic health for its residents and taxpayers."

Census data show that the median household income in Detroit was less than $28,000, compared with $49,000 across Michigan, with over 36 percent of residents lived in poverty as of 2011. The median home value of $71,000 in the city was barely half the $137,000 value across Michigan.

The city listed assets and debt of over $1 billion in a Chapter 9 petition filed in court in Detroit. Chapter 9 of the U.S. Bankruptcy Code is reserved for municipalities, with rules distinct from that of Chapter 11.

Orr warned in May 2012 that Detroit might run out of cash. He proposed to restructure over $17 billion in debt and long-term obligations made by the city.

This restructuring plan entails reducing pension payments for public employees, terminating cost-of-living increases, removing some workers from the system and making the rest pay more. Orr said in a report that without a significant restructuring of its debt, Detroit would not be able to “break the cycle of damaging cutbacks in essential municipal services and investments."

Topics: bankruptcy

If you liked the article, share on:

Comments

Recommended

In September 27, 2016, Porsche initially filed for a patent that is the “Unique Active Rear Diffuser”. And earlier this week, on April 27, 2017, the United States Patent and...
by - April 29, 2017
The Insurance Institute for Highway Safety (IIHS) has given its Top Safety Pick+ award to the redesigned version of the 2017 Kia Cadenza. This was a result of excellent a...
by - April 29, 2017
It’s pretty neat if you possess something of an extraordinary breed like, say, the Pagani Huayra. There are after all just a total of 100 units ever been built by...
by - April 28, 2017
If you’ve ever visited an arcade, chances are you have already seen a Logitech G920 wheel. If that doesn’t ring a bell, it’s the steering wheel that you use when...
by - April 28, 2017
Toyota Motor Corporation disclosed that it will be bringing two of its Mirai fuel cell vehicles to China by October of this year. Tests will then be conducted on these...
by - April 28, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries