The move could slash pension benefits to city workers and retirees, and leave bond holders with only pennies on the dollar.
The bankruptcy was filed by Emergency Manager Kevyn Orr had to approve the filing but he said the financial condition of the city left him no choice, saying the that the city could not meet its obligation to either its citizens or its creditors.
"The only feasible path to ensuring the city will be able to meet obligations in the future is to have a successful restructuring via the bankruptcy process," Michigan Gov. Rick Snyder said in the letter authorizing the filing.
But public employee unions are sure to fight the move.
Orr already halted payments on about $2 billion in debt last month, saying the city needed to preserve its dwindling supply of cash. The city faces total liabilities of about $18 billion. Orr's reorganization plan calls for cutting $11.5 billion in debt down to $2 billion. That would mean that investors and retirees would receive an average of just 17% of what they are owed. Specific plans for the cuts are unknown at this time.
I am not surprised at all. The city has been in ruins for the past 20 years. Once Mayor Kilpatrick came in and made everything a mess, I knew the city was going under even further. It's going to take a lot to rebuild that city.
Michigan has been doing really badly in financial terms. I thought that maybe the Tigers would help revive Detroit, but it looks like that's not gonna happen. Northern Michigan (still in the Lower Peninsula) isn't too good either. Grand Rapids is doing okay though, which is a good thing for me. But still.
they're going to need to start cracking down on some of the violence and drugs if they're thinking of making a serious recovery. Being a ghost town is one thing, but being a place where you can get mugged in broad daylight, as two of my friends did, is not going to attract any new businesses and educated people to move there.
