Detroit, auto capital of the world, files for bankruptcy

DetroitDetroit becomes the largest US city ever to move for bankruptcy, with a liability running into $18 billion.

Automaking capital, Detroit became the largest US city ever to move for bankruptcy, with a liability running into $18 billion.

"Today I authorised Detroit's emergency manager to seek federal bankruptcy protection for the City of Detroit. This is a difficult, painful step, and it is one I would not be authorising if I felt any other viable option remained," the Michigan Governor Rick Snyder said in a video message posted on his website.

Detroit which at one time had some two million population has now reduced to just 70,000.

"The fiscal realities confronting Detroit have been ignored for too long. I'm making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future," the governor said.

Snyder said the move was a difficult step, "but the only viable option to address a problem that has been six decades in the making".

The decision allowed Detroit Emergency Manager Kevyn Orr to make a filing under Chapter 9 of the federal bankruptcy law.

Chapter 9 protects financially distressed municipalities from creditors while their debts are resolved under the direction of a bankruptcy judge.

Detroit has more than USD18 billion in debt and unfunded liabilities and doesn't have the revenues to meet those obligations and provide an adequate level of services to its people, who pay the highest taxes per capita in Michigan.

Currently, 38 cents of every city dollar goes toward debt repayment, legacy costs and other obligations. By 2017 that figure is expected to reach 65 cents per dollar.

"Bankruptcy is the only feasible option to fix the city's finances and do what is right for the 700,000 people of Detroit," Snyder said.

... contd.

Please read our terms of use before posting comments
TERMS OF USE: The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).
comments powered by Disqus