City of Detroit files for bankruptcy

Detroit became the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection.
Associated Press
Jul 18, 2013


Kevyn Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing Thursday in federal bankruptcy court.

A number of factors — most notably steep population and tax base falls — have been blamed on Detroit's tumble toward insolvency. Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them.

In recent months, the city has relied on state-backed bond money to meet payroll for its approximately 10,000 employees. Orr was unable to convince a host of creditors, the city's union and pension boards to take pennies on the dollar to help facilitate the city's massive financial restructuring. If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment. "Only one feasible path offers a way out," Gov. Rick Snyder said in a letter to Orr and state Treasurer Andy Dillon, approving the bankruptcy.

Snyder determined earlier this year that Detroit was in a financial emergency and without a plan to improve things. He made it the largest U.S. city to fall under state oversight when a state loan board hired Orr in March. His letter was attached to Orr's bankruptcy filing. "The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services," Snyder wrote. "The city's creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations."

A turnaround specialist, Orr represented automaker Chrysler LLC during its successful restructuring. He issued a warning early on in his 18-month tenure in Detroit that bankruptcy was a road Detroit and its creditors did not want to tread. He laid out his plans in June meetings with debt holders, in which his team warned there was a 50-50 chance of a bankruptcy filing.

Some creditors were asked to take about 10 cents on the dollar of what the city owed them. Underfunded pension claims would have received less than the 10 cents on the dollar under that plan.

Orr's team of financial experts put together said that proposal was Detroit's one shot to permanently fix its fiscal problems. The team said Detroit was defaulting on about $2.5 billion in unsecured debt to "conserve cash" for police, fire and other services.

"Despite Mr. Orr's best efforts, he has been unable to reach a restructuring plan with the city's creditors," the governor wrote. "I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection."
Detroit's budget deficit is believed to be more than $380 million. Orr has said long-term debt was more than $14 billion and could be between $17 billion and $20 billion.


The Hero Zone's picture
The Hero Zone


Simple Enough II

Successful turnaround with Chrysler LLC.? OMFG are You kidding me? Look how much the American plants lose to manufacturing in China in the next few years. Mark my words it will be sad.

Left Sandtown

Is the Damm beginning to break?What is going to be the fall out of this?Martial Law,or just write it off with a fake Bond.We are not far from Tuesday,that`s Solent Green Day.Bless us all Lord.


This is what happens when people blindly vote Democrat each and every election.

Self inflicted wound. They got EXACTLY what they deserved.


It amazes me how people in the unions vote the way the union tells them to. Many of them never read about issues or candidates, or how the way they vote will affect their families. It's sad they can't think for themselves!


Sheeple led to the fiscal cliff by their controllers.

Again, exactly what they deserved.

The Big Dog's back

Of course it had nothing to do with the Big Corporations destroying the city, leaving behind empty buildings, polluted land and air and water and by moving to the suburbs. Nah.


They left due to the socialistic government installed by the parasite class. High taxes and crushing regulations brought about Democrats and their union puppet masters.

Study up a bit on Detroit's tax rates.


Seems strange that the Big Corporations are leaving just some cities Some maybe locating out of the country however many are just relocating in other cities. Why would they go through the expense to do that????? What do some cities offer that would cause a Corp. to do that?

The Big Dog's back

A ton of tax breaks. Cost them virtually nothing.


To many years of one political party rule. Just goes to show what happens when you don't have change! All Republican or all Democrat = all bad!!!



J Cooper

50 years of liberal leadership in the city.


And they would do the same for our entire country given the chance.

The Big Dog's back

Only 1 problem with that scenario. Liberals ran the country for 40 years. Best 40 years this country ever had.


Good thing we booted them out or the entire USA would be just like Detroit: Bankrupt and a slum.

You can only live off other people's money for so long. Eventually it runs out.

The Big Dog's back

Yep, the Conservative years brought us the 1st Great Depression and the Great Recession of 2008.


The problem started in 1913 with the creation of the Federal Reserve, until that point America prospered, since then inflation has killed the middle class. We were that last "honest" currency with our dollar backed by a real If you believe the Fed that inflation is 2 percent per year, every 20 years the dollar loses half it's value. Think about when you started driving, how many hours did you have to work for a full tank of gas, I used to fill up for 5 dollars in 1985, at minimum was back then I worked for 1 hours and 20 minutes, if I had a minimum wage today how many hours would I have to work...5 or 6 hours. This is not a D or R issue, this is a fundamental break down of our monetary policy.


So glad someone else 'gets it'. A few of the other posters here could learn from you. It's never been a Democrat or Republican issue, but the media would like people to think so, in order to keep them fighting and distracted from the real issue.

digger nick

Obama "I saved Detriot" LOL Lets hope Obamanomics don't dave any other towns LMAO


The controller got to the court house minutes before the court was scheduled for a TRO to stop Detroit from filing. The gov't unions were trying to keep their pensions protected. The controller got there just in time. Now the city might just have a chance to survive.|breaking|text|FRONTPAGE


Institute a %.50 retail sales tax, probably for more than a year, regardless of public input. Attempt to pass an "emergency" levy for 10 years regardless of public input. Leach the money from those citizens remaining.


Just read today that the states and cities losing the most population are those run by Democrats. All the entitlements and other government expenses liberals seem to think is the answer turns out to be the problem, especially when those still actually paying taxes are either impoverished or driven away.

I have no sympathy whatsoever for Detroit or its entire Democrat/union population. Those who are blameless and stuck in that hellhole, though, have my most heartfelt condolences. Here's hoping they find some way out, and sooner rather than later!


Met a young man from Detroit working at Cedar Point. No jobs in Detroit for young college students. This young man wants a way out. Good luck to him.


It is safely in the courts hands now. The court will appoint an overseer to decide what is fair and equitable. Someone NOT from Detroit or Michigan. Someone who has successfully dealt with large bankruptcies before. You can be sure none of the involved parties from Detroit will be happy with the result, but Detroit will survive, unless the people vote with their feet. The suburbs will survive.


Kwame Kilpatrick for Perkins Superintendant!!!


I love the name Kwame! Such a household name.

Darwin's choice

Just a preview of what we're all in for! Yay team Obama...!
Chicago next?


Another reason the bankruptcy should be accepted. Those in Detroit only want to look at the short term. Sound familiar?


“The whole foundation that brings him here is false,” Crittendon said. “We do not have a $15 [billion] or a $20 billion debt problem. We have less than a $2 billion short-term debt problem that we could manage if we just went out and collected revenues that are owed to the city; stop giving, you know, tax abatement to people who can actually afford to pay taxes.”


Those who owe the city have left, went out of business, or went bankrupt. Even debt collectors won't buy Detroit's receivables.


Funny how it is the red states that are receiving the most entitlements.


They appreciate your donations, will you provide more? Detroit sure backs that claim.


Source tk????????


Every major city will be here sooner or later. All about the union pensions. FACT

J Cooper

Please put the seat down, dog breath is drinking the liberal Kool Aid again.

J Cooper

Detroit, ruined by the unions bosses and the great liberal experiment.


For those of you who think Casinos are the answer for Sandusky and Erie County, Casinos contributed to Detroit's continued demise.

Take a look at all the boarded up storefronts around the downtown Cleveland casino.


Those buildings were boarded up BEFORE the casino opened. Business in that area closed when LeBrown left the Cavs and the Indians were horrible. Now that the casino has opened, some of those places have new tenants and don't be surprised to see more businesses open now that both teams are on the upswing.


Need another example? Head to Atlantic City where Casinos were advertised as the silver bullet for addressing that city's blight.

Don't walk out the casino's back door there--you'll get mugged.

The Hero Zone's picture
The Hero Zone

I would contend that the era of a big city's usefulness is very threatened. With modern transportation and telecommunication there is no need to live three blocks from where you work in an overpriced, undersized, unable to enter a lifestyle of ownership apartment. I am amazed at how many businesses that don't "need" to be where they are still are there.

Rent is too damn high!

2cents's picture

I drove through Detroit a few weeks ago, boy highway 94N was like a debris field, what a mess : (


Again a single party control whether D or R is bad. To many years of more of the same has destroyed that city. It will never bounce back, another Gary Indiana.

The New World Czar

Give it time, Chicago and Cleveland will be soon to follow. Trying to solve the strangling union pension scenario is like trying to fix a water main break with a tube of Krazy Glue.

Cliff Cannon

Being a native Detroiter. I can not adequately say how sad Detroit's state leaves me. Even though, we moved when the 1967 race riots happened. We have never stopped returning for visits.

Once known as " America's Paris " for its amazing, seemingly never ending beautiful architecture ( most of it, still in place) It seemed,that each visit we made showed more deterioration.

Apart from getting America out of it's job stealing " Nafta " & " Cafta" treaty's I know not the answer for Detroit's misery's. I just know that it is heart breaking to see my hometown fall into such shambles. Godspeed Detroit residents

The Hero Zone's picture
The Hero Zone

Sorry to hear, that kind of loss is very personal when the place you used to live/work in is now what is described here. This is a bit of a warning to other such cities about possible governmental influences in the demise, but also about being careful about having (most) all your eggs in one basket.

We see it currently in the Middle East and Africa, when a country relies solely on the export of oil, gems, etc. for its income. When that resource is finally exhausted and no other kind of business or other infrastructure exists it will only make the tribal feuding, warlording, and such worse.


Another domino falls in the line of government gone wild. It's picking up steam. I'd be getting out of any bonds with municipalities.


Surprised that POTUS isn't rushing in with money like he did with GM and Chrysler.

Darwin's choice

He's too busy giving travon martin interviews!


Sounds like the biggest single expense is the unfunded pensions. Shows what happens when gov't, this time city gov't, kicks the can down the road for someone else to pay and fund the pensions of those working for the city. The politicians, 90% Democrats in the city gov't , always a Democrat majority for over 60 years, kicked the can. It doesn't take Democrats to do the stupid thing but in Detroit, it was the democrats, might as well call it as it is. Now those same Democrat politicians, or their kids, or their replacements, want the rest of the country to save them and pay. With all the other cities that are in line to fail I don't think that even Obama is foolish enough to make that precedent. Every other city, that hasn't funded their pensions will line up at the same federal gov't hind teat. Search on how many cities have substantially underfunded their pensions, Detroit is just the tip of this iceberg.

The Big Dog's back

poohball, what about all the private companies who have unfunded pensions? Dwarfs the Gov bigtime, but that doesn't go along with your koch brothers sponsored message.


Private companies aren't crying for the federal gov't to fund their pensions. The city of Detroit is.
But I will play. How much does your boogie men the Koch Brothers owe the pension funds?

The Big Dog's back

I wouldn't cry either if the Gov took my pension liabilities off my hands. derp.


Here in our backyard Huron County has always had the distinction of being in the top 5 counties for unemployment. That started in the late seventies. Maybe earlier, I'd have to check records. There are reasons for that, just as there are valid reasons for Detroit.