The minority-majority city of Detroit, Michigan has officially went bankrupt.
The City of Detroit filed for Chapter 9 bankruptcy on July 18, 2013.
It is the largest municipal bankruptcy in the history of the nation, passing Stockton, CA.
Detroit's debt is estimated to be $18-$20 Billion. Detroit’s population has declined from 1.8 million in 1950 to 700,000 people today. It is home to thousands of unoccupied buildings, vacant lots and unlit streets.
The core economic center of manufacturing is now officially trying to save grace amiss the ongoing financial woes that state and federal lawmakers put upon the city.
Gov. Rick Snyder’s office was making plans this afternoon to hold a 10 a.m. Friday morning news conference at the Maccabees Building, 5057 Woodward in Midtown, according to his office. It’s the same location where the governor declared a financial emergency for Detroit on March 1.
Snyder authorized Emergency Manager Kevyn Orr to file bankruptcy under a law the Legislature passed in December that replaced the previous emergency manager law voted repealed last November.
The bankruptcy filing came minutes before Ingham County Circuit Judge Rosemarie Aquilina was set to hold an emergency hearing Thursday afternoon on a request for a temporary restraining order blocking Snyder from authorizing a bankruptcy filing.
“It was my intention to grant you your request completely,” Aquilina told lawyers for Detroit’s pension boards.
The judge did grant temporary restraining orders against Snyder and Orr taking further action in the bankruptcy proceedings.
Ronald King, an attorney representing the police/fire and general retirement pension systems, said he may file a motion Friday in the case seeking to require Orr, an officer of the state, to withdraw the bankruptcy filing.
After the hearing, King expressed frustration with the governor’s office after filing a motion for a temporary restraining order at 3:37 p.m. and giving Snyder’s attorney extra time to get to the downtown Lansing courthouse.
The bankruptcy case was filed at 4:06 p.m. and Aquilina convened the emergency hearing at 4:11 p.m.
“This was a race to the courthouse this afternoon and yet another example of (the Snyder administration) completely usurping the will of the people, ignoring the referendum in the fall and then flat-out racing to file bankruptcy protection so you can get out from the protection of (pensions),” King told reporters.
Aquilina was preparing to hear arguments Monday from retirees seeking to stop the bankruptcy filing, which produced an automatic stay of all pending litigation and capped a month of intense talks between Orr’s team and creditors, which largely have failed to restructure as much as $20 billion in debt and long-term liabilities.
Orr’s spokesman, Bill Nowling, could not be reached for comment. And state officials contacted by The News on Thursday declined to discuss the matter, though Snyder spokesman Jeff Holyfield confirmed the governor authorized the filing.
The Chapter 9 filing could take years, experts say, despite hopes by the governor and Orr that the case can be wrapped up in a year. 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.
During a month of negotiations, Orr has reached a settlement with only two creditors: Bank of America Corp. and UBS AG. They have agreed to accept 75 cents on the dollar for approximately $340 million in swaps liabilities, according to a source familiar with the deal.
The bankruptcy plan was expected to closely follow Orr’s restructuring proposal that was unveiled to creditors on June 14 — a proposal that drew criticism from some creditors who said the cuts were too deep and did not include the sale of city assets, including Belle Isle and a Detroit Institute of Arts collection worth billions. He proposed paying most of the money owed to secured creditors while pension funds, unions and unsecured bondholders would receive, in some cases, 10 cents on the dollar.
The filing is expected to trigger a costly, long and precedent-setting battle by creditors and Detroit’s bankruptcy case could become a template for the treatment of pensions in the largely uncharted world of municipal bankruptcies.
Unsecured creditors could take the biggest hit in bankruptcy court. Orr wants them to share a $2 billion payout on approximately $11.5 billion worth of debt, which includes an estimated $9.2 billion in health and pension benefits and $530 million in general-obligation bonds.
Instead of paying creditors in full, Orr would use $1.25 billion over the next decade to buy police cars and fire trucks, replace broken street lights, tear down burned-out homes, fight blight and improve city services.
Orr wants to stabilize the city, woo new residents, provide essential city services for Detroiters, lower property taxes and transfer costly departments, including the water department, to an outside group.
Once the nation’s fourth largest city, Detroit was hailed as an industrial hub with nearly 2 million people. Today, after a half-century of residential flight, high unemployment, a significant reduction in state funding, plummeting income and property taxes, corruption and chronic mismanagement, the bankruptcy filing solidifies the city's standing as a model of urban decline.
The filing serves as a grim reminder of the bankruptcies that hit the auto industry four years ago. Unlike the cases of General Motors and Chrysler in 2009, the White House offered no financial help.
Snyder’s staff is making plans to explain the bankruptcy decision during appearances on Sunday morning talks shows, including “Face the Nation” and “Meet the Press,” according to one source.
The case was expected to be assigned by Alice Batchelder, chief judge of the 6th U.S. Circuit Court of Appeals, which spans Michigan, Ohio, Kentucky and Tennessee. Any judge in the four-state region could be assigned the case, though Batchelder will weigh potential political concerns and decide who has the time and capability to handle a complex, large case.
Some legal experts predict the case would be assigned to a judge from outside the city to avoid any potential conflicts of interest.
Okay, let the blame game begin. Who is the conservative junk food media going to blame for Detroit?
Guess one name.
Hint: The country's first Black president.
Since it's been declining in population since Richard Nixon, I guess it's not him at fault.
Surely Republicans don't get blamed for economic turmoils, right?
Heck January 2005 to January 2009 were the some of the best times of our lives in America. Heck, no recession, no massive hurricane, wars were minor things on television. Who could of thought that a town like Detroit would be suffering during those times?
Not that!
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