Detroit became the biggest U.S. city to file for bankruptcy, seeking court protection from creditors while it tries to eliminate a budget deficit and cut long-term debt.

Friday, July 19, 2013

Detroit became the biggest U.S. city to file for bankruptcy, seeking court protection from creditors while it tries to eliminate a budget deficit and cut long-term debt.

Detroit Files for Bankruptcy After Budget Deficit Swells

Trash sits in front of dilapidated houses on Mackay Street in Detroit, Michigan, on Feb. 21, 2013. Photographer: Jeff Kowalsky/Bloomberg

Bloomberg News

Detroit Becomes Biggest U.S. City to File for Bankruptcy

By Dawn McCarty and Steven Church

The city listed assets and debt of more than $1 billion in a Chapter 9 petition filed today in federal court in Detroit. Chapter 9 of the U.S. Bankruptcy Code is reserved for municipalities and differs from the rules used by bankrupt companies in Chapter 11.
Kevyn Orr, the state-appointed emergency fiscal manager, warned in May that the city might run out of cash. His proposal to restructure more than $17 billion in debt and long-term obligations includes cutting pension payments, ending cost-of-living increases, removing some workers from the system and making the rest pay more.
“Without a significant restructuring of its debt, the city will be unable to break the cycle of damaging cutbacks in essential municipal services and investments,” Orr said in a report.

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