Detroit Becomes Largest US City to File for Bankruptcy
The Detroit Free Press reports that the filing made by the city's emergency manager, Kevyn Orr,
... begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.
The Detroit News adds that the Chapter 9 filing means that
A bankruptcy judge could trump the state constitution by slashing retiree pensions, ripping up contracts and paying creditors roughly a dime on the dollar for unsecured claims worth $11.45 billion.
Governor Rick Snyder authorized the bankruptcy filing, calling it "a difficult, painful step" and said that
By filing for bankruptcy, Detroit can get back on the right path. It can fix its finances. And it can focus on investing in city services so that Detroiters have a better quality of life. Better police and fire protection, trash pickup and street lighting.
Orr was officially appointed emergency manager of Detroit in March marking the "largest state takeover of a U.S. city" and said he would begin what he called "the Olympics of restructuring" but critics blasted as an undemocratic move that would bring further privatization.
On Wednesday, the Wall Street Journal reported that Orr
who is paid $275,000 a year, has hired a new police chief and chief financial officer. The city is in the midst of privatizing its garbage collection and outsourcing its publicly run electric department for street lighting. Mr. Orr is contemplating leasing the city's island park and its regional water and sewer system. He is also weighing a takeover of at least one of the city's pension funds, which are under investigation by the city's auditor general for possible mismanagement.
WXYZ posted a copy of the bankruptcy filing papers, and they can be seen below.