The Motor City on July 18, 2013 file for bankruptcy under Chapter 9, becoming the largest local authority to do so. Michigan Gov. Rick Snyder moved to take the drastic step after recommendation from an emergency city manager--Kevyn Orr--deputed by him after months of prolonged and protracted negotiations with the city's creditors, unions and business people. The city debt is estimated to range between $18 billion and $20 billion. The Motor City's stiff fall from grace in recent decades is as dramatic as its meteoric rise in the early decades of the twentieth century. In 1950s, its population stood at 1.8 million mostly due to influx of hundreds of thousands of auto employees. However, foreign competition and city mismanagement brought its recent decadence with the current population of 700,000 people, abandoned houses and bad city roads. The debt of the city easily dwarfs the second-largest municipal bankruptcy by the Jefferson County, Alabama that was teetering under $4 billion in debt and declared bankruptcy in 2011. Before Motor City's Chapter 9 filing--a code used by more than 60 municipal jurisdictions since mid-1950s--Stockton, California, which had filed for bankruptcy in 2012, was the most populous city to file for bankruptcy.
On July 19, 2013, a state judge, Judge Rosemarie Aquilina of Ingham County Circuit Court, ruled that the Detroit's Chapter 9 filing had violated the state constitution that protects the pension of the retired public employees.
However, to the relief of the city's emergency financial overseer, US Bankruptcy Judge Steven Rhodes approved a motion on July 24, 2013 to freeze all litigation against the city during the bankruptcy process, effectively giving Rhodes the authority to rule on the issues raised by the retired public employees related to their pensions.
Detroit's Bankruptcy Exit Plan Approved
In an laudable move, Detroit's brief 16-month spell in bankruptcy was given first green light to leave past on November 7, 2014. US Bankruptcy Judge Steven Rhodes for the Eastern District of Michigan on November 7, 2014 okayed the city's bankruptcy re-organization plan that would shed about $7 billion in debt and spend about $1.7 billion to improve the Motor City's crumbling infrastructure and services. Detroit was burdened with $18 billion in debt when it had filed for bankruptcy on July 18, 2013.
On July 19, 2013, a state judge, Judge Rosemarie Aquilina of Ingham County Circuit Court, ruled that the Detroit's Chapter 9 filing had violated the state constitution that protects the pension of the retired public employees.
However, to the relief of the city's emergency financial overseer, US Bankruptcy Judge Steven Rhodes approved a motion on July 24, 2013 to freeze all litigation against the city during the bankruptcy process, effectively giving Rhodes the authority to rule on the issues raised by the retired public employees related to their pensions.
Detroit's Bankruptcy Exit Plan Approved
In an laudable move, Detroit's brief 16-month spell in bankruptcy was given first green light to leave past on November 7, 2014. US Bankruptcy Judge Steven Rhodes for the Eastern District of Michigan on November 7, 2014 okayed the city's bankruptcy re-organization plan that would shed about $7 billion in debt and spend about $1.7 billion to improve the Motor City's crumbling infrastructure and services. Detroit was burdened with $18 billion in debt when it had filed for bankruptcy on July 18, 2013.
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