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Detroit declares bankruptcy

by 1389AD ( 6 Comments › )
Filed under Barack Obama, Breaking News, Economy, Headlines at July 18th, 2013 - 8:31 pm

Now this is awkward:

Fox News has the story:

Detroit filed for the largest municipal bankruptcy in U.S. history Thursday after steep population and tax base declines sent it tumbling toward insolvency.

The filing by a state-appointed emergency manager means that if the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.

Kevin 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.

“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. The letter was attached to the 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.”

Snyder had determined earlier this year that Detroit was in a financial emergency and without a plan to improve things. Snyder hired Orr in March, and he released a plan to restructure the city’s debt and obligations that would leave many creditors with much less than they are owed.

Orr was unable to convince a host of creditors, including the city’s union and pension boards, to take pennies on the dollar to help facilitate the city’s massive financial restructuring.

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 10 cents on the dollar under that plan.

A team of financial experts put together by Orr said that proposal was Detroit’s one shot to permanently fix its fiscal problems.

The filing leads to a 30 to 90 day period that will determine whether or not the city of Detroit is eligible for Chapter 9 protection, and define the number of claimants who may compete for Detroit’s limited settlement resources. The petition seeks protection from unions and creditors who are renegotiating $18.5 billion in debt and liabilities, according to the Detroit Free Press.

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1389AD is not surprised.

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6 Responses to “Detroit declares bankruptcy”
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  1. lobo91
    1 | July 18, 2013 9:03 pm

    Of course, when he said that, he didn’t actually mean “the city of Detroit.” That was going to go bankrupt no matter what anyone did. He was using “Detroit” as a euphemism for the American auto industry (and more specifically, the UAW). GM and Chrysler DID actually go bankrupt on his watch, however, and took tens of billions in investor dollars with them, only to be bailed out with tens of billions in taxpayer dollars. Which, by the way, we’ll never get back, despite his lies on that topic.


  2. Da_Beerfreak
    2 | July 19, 2013 5:53 am

    If Obama had a city, it would look like …


  3. 3 | July 19, 2013 7:11 am

    @ Da_Beerfreak:

    Harare!


  4. 4 | July 19, 2013 10:56 am

    Also see…

    GOPUSA: The Motor City goes bust


  5. The Osprey
    5 | July 19, 2013 1:15 pm

    Macker wrote:

    @ Da_Beerfreak:

    Harare!

    httpv://www.youtube.com/watch?v=cqUPvIJA3eI


  6. Da_Beerfreak
    6 | July 19, 2013 1:55 pm

    The Osprey wrote:

    Macker wrote:

    @ Da_Beerfreak:

    Harare!

    A damn good location for the UN after we kick ‘em out of NYC …


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