Detroit files for largest municipal bankruptcy in US history
On Thursday the city of Detroit’s emergency manager filed all the necessary documents allowing the city to file for bankruptcy after accruing more than $18 billion worth of debts, and making it the largest city to file in US history.
The filing will start a 30 to 90 day period during which it will be determined how many claimants might compete for the limited settlement resources Detroit has to offer.
State-appointed emergency manager, Kevyn Orr, who has overseen the filing with U.S. Bankruptcy Court, said that the city liabilities are “more than $1 billion” and estimated that the number of creditors may be “over 100,000”.
Michigan governor Rick Snyder decided to file for bankruptcy after Detroit’s emergency manager warned consistently that negotiations had hit an impasse and seeking bankruptcy protection would be in the interest of the city.
The governor described a city whose infrastructure is on the verge of collapse, explaining that citizens wait 58 minutes for the police to respond to calls, compared to a national average of 11 minutes. Detroit had only a third of its ambulances in service in the first quarter of 2013 and in the city there are approximately 78,000 abandoned buildings.
In the last decade Detroit has lost as much as 25% of its population and the number of inhabitants has dramatically dropped between 2000 and 2010. In 2011, the city had the fastest population decline in the city’s history, taking it back to the same level as in the 1910 census.
Mr Snyder pointed out that the unemployment rate had shockingly tripled since 2000 and that the homicide rate was at its highest level in 40 years.
Snyder said: “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.”
If the bankruptcy filing is approved Detroit’s assets could be soon liquidated to meet creditor payments.
The city has closed certain public offices on a temporary basis, including its City Council and Mayor’s Office, to help save money.