City of Detroit files for bankruptcy

[naslund.is.king]

Too long didn't read.

[nuckin_futz]

Decades of mismanagement and financial idiocy. Electing "leaders" like this ..........

to be your mayor. Who don't have the financial acumen to run a lemonade stand who later wind up in prison for a host of charges related to being a political thug.

Congrats Detroit, you brought it all on yourself.

Harrisburg, Pennsylvania you're up next. Then half of California.

[TOMapleLaughs]

Detroit's been on the decline for 60 years.

[HTania]

so after this, they will have a fresh start

[DonLever]

Detroit's been on the decline for 60 years.

[Frontier Psychiatrist]

There comes a point when people need to help each other in such dire times... Detroit needs more Toby Jones.

[Lancaster]

They were certainly slow to respond to the changes in the marketplace and international trends. When I say relatively sudden I mean in relation to world history. Depopulation of cities due to industrial causes tend to be much slower than 50 years and most historical precedents for depopulation are from disease, famine or war. None of these are the case for Detroit.

Manufacturing companies could have built anything in those factories if they were retrofitted but the city banked everything on the auto industry. They could have been building washing machines just as well as cars although they would have needed to build a quality product for a good price. Some people say the unions were the problem but I lean more to believing their lack of innovation and foresight were greater causes.

[The Hornet]

Welp, better reason to buy a German, Japenese or Korean car,

[Pouria]

Detroit files for bankruptcy protection

• A vacant, boarded up house stands in the once thriving Brush Park neighborhood with the downtown Detroit skyline behind it. (Rebecca Cook/Reuters)

Once the very symbol of American industrial might, Detroit became the biggest U.S. city to file for bankruptcy Thursday, its finances ravaged and its neighbourhoods hollowed out by a long, slow decline in population and auto manufacturing.

The filing, which had been feared for months, put the city on an uncertain course that could mean laying off municipal employees, selling off assets, raising fees and scaling back basic services such as trash collection and snow plowing, which have already been slashed.

"Only one feasible path offers a way out," Gov. Rick Snyder said in a letter approving the move.

Kevyn Orr, a bankruptcy expert hired by the state in March to stop Detroit's fiscal free-fall, made the filing in federal bankruptcy court.

Michael Sweet, a bankruptcy attorney in Fox-Rothschild's San Francisco office, said the city would pay current employees. But "beyond that, all bets are off."

"They don't have to pay anyone they don't want to," Sweet said. "And no one can sue them."

Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million now struggles to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them"

In recent months, the city has relied on state-backed bond money to meet payroll for its 10,000 employees.

Orr was unable to persuade a host of creditors, unions and pension boards to take pennies on the dollar to help facilitate the city's massive financial restructuring. If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.

Snyder determined earlier this year that Detroit was in a financial emergency and without a plan for improvement. He made it the largest U.S. city to fall under state oversight when a state loan board hired Orr. His letter was attached to Orr's bankruptcy filing.

Detroit needs to 'radically restructure'

"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."

The governor's letter said the decision comes on the heels of 60 years of decline for Detroit, "a period in which reality was often ignored."

Snyder noted that at this point, the city can't meet its basic obligations to citizens or creditors. He characterized the filling as an opportunity for a fresh start in a city burdened with debt "it cannot hope to fully pay."

The governor highlighted some of the services that are struggling to keep up in the border city. Detroit has roughly 78,000 abandonned structures — a public safety hazard that "reduces the quality of life" in the city, the governor said. Streetlights were another issue, with roughly 40 per cent of them found to be not functioning in the first quarter of this year.

Police, fire and ambulance fleets are in disrepair and police response times lag the national average by a large margin, Snyder said, noting that a resident of Detroit waits an average of 58 minutes for police to respond to a call, while the national average is just 11 minutes.

A turnaround specialist, Orr represented automaker Chrysler LLC during its successful restructuring.

He issued a warning early on in his 18-month tenure in Detroit that bankruptcy was a road he preferred to avoid.

He laid out his plans in June meetings with debt holders, in which his team warned there was a 50-50 chance of a bankruptcy filing. 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 the 10 cents on the dollar under that plan.

Orr's team of financial experts said that proposal was Detroit's one shot to permanently fix its fiscal problems. The team said Detroit was defaulting on about $2.5 billion in unsecured debt to "conserve cash" for police, fire and other services.

"Despite Mr. Orr's best efforts, he has been unable to reach a restructuring plan with the city's creditors," the governor wrote. "I therefore agree that the only feasible path to a stable and solid

Detroit is to file for bankruptcy protection."

Detroit's budget deficit is believed to be more than $380 million. Orr has said long-term debt was more than $14 billion and could be between $17 billion and $20 billion.

Orr's decision to file now may have been influenced by lawsuits filed by some city workers and retirement systems to prevent Snyder from approving a bankruptcy request from the emergency manager, said Detroit-area turnaround specialist James McTevia.

They have argued that bankruptcy could change pension and retiree benefits, which are guaranteed under state law.

Orr has said federal bankruptcy laws trump state law in this matter.

A bankruptcy judge will stay all the litigation, McTevia said.

"One court will adjudicate all these," McTevia said.

Some are concerned that a bankrupt Detroit will cause businesses large and small to reconsider their operations in the city. But General Motors, which filed and emerged from a Chapter 11 bankruptcy, does not anticipate any impact to its daily operations, the automaker said Thursday in a statement.

"GM is proud to call Detroit home and today's bankruptcy declaration is a day that we and others hoped would not come," the statement said. "We believe, however, that today also can mark a clean start for the city.

Detroit has more than double the population of the Northern California community of Stockton, California, which until Detroit had been the largest U.S. city ever to file for bankruptcy when it did so in June 2012.

Before Detroit, the largest municipal bankruptcy filing had involved Jefferson County, Alabama, which was more than $4 billion in debt when it filed in 2011. Another recent city to have filed for bankruptcy was San Bernardino, California, which took that route in August 2012 after learning it had a $46 million deficit.

http://www.cbc.ca/ne...bankruptcy.html

Is anyone surprised?

[nuckin_futz]

S&P Places Detroit Sewer Bonds on Credit Watch Negative.

You know it's bad when.

[Electro Rock]

Yes, but why? Other big cities like Chicago, NY, Boston are not as bad. And they have a large unionized population.

[nuckin_futz]

It will be very interesting to see how all of this plays out. But one thing is for sure - the city of Detroit is flat broke. One of the greatest cities in the history of the world is just a shell of its former self. The following are 25 facts about the fall of Detroit that will leave you shaking your head...

1) At this point, the city of Detroit owes money to more than 100,000 creditors.

2) Detroit is facing $20 billion in debt and unfunded liabilities. That breaks down to more than $25,000 per resident.

3) Back in 1960, the city of Detroit actually had the highest per-capita income in the entire nation.

4) In 1950, there were about 296,000 manufacturing jobs in Detroit. Today, there are less than 27,000.

5) Between December 2000 and December 2010, 48 percent of the manufacturing jobs in the state of Michigan were lost.

6) There are lots of houses available for sale in Detroit right now for $500 or less.

7) At this point, there are approximately 78,000 abandoned homes in the city.

8) About one-third of Detroit's 140 square miles is either vacant or derelict.

9) An astounding 47 percent of the residents of the city of Detroit are functionally illiterate.

10) Less than half of the residents of Detroit over the age of 16 are working at this point.

11) If you can believe it, 60 percent of all children in the city of Detroit are living in poverty.

12) Detroit was once the fourth-largest city in the United States, but over the past 60 years the population of Detroit has fallen by 63 percent.

13) The city of Detroit is now very heavily dependent on the tax revenue it pulls in from the casinos in the city. Right now, Detroit is bringing in about 11 million dollars a month in tax revenue from the casinos.

14) There are 70 "Superfund" hazardous waste sites in Detroit.

15) 40 percent of the street lights do not work.

16) Only about a third of the ambulances are running.

17) Some ambulances in the city of Detroit have been used for so long that they have more than 250,000 miles on them.

18) Two-thirds of the parks in the city of Detroit have been permanently closed down since 2008.

19) The size of the police force in Detroit has been cut by about 40 percent over the past decade.

20) When you call the police in Detroit, it takes them an average of 58 minutes to respond.

21) Due to budget cutbacks, most police stations in Detroit are now closed to the public for 16 hours a day.

22) The violent crime rate in Detroit is five times higher than the national average.

23) The murder rate in Detroit is 11 times higher than it is in New York City.

24) Today, police solve less than 10 percent of the crimes that are committed in Detroit.

25) Crime has gotten so bad in Detroit that even the police are telling people to "enter Detroit at your own risk".

[Heretic]

How am I a jerk for not reading it its way to long.

[DonLever]

Michael Moore, the anti-capitalist, seem strangely silent on the bankruptcy of Detroit. He sure lambasted the auto makers over Flint, Michigan.

Detroit has been runned by the Democrats since the 1960's. It's mayor been Democratic since 1962.

[Lancaster]

Because you took the time to post about it.

If you didn't care to read it, then don't bother posting...you're just wasting internet bandwidth.

Back on topic.

It's unbelievable that a major US city files for bankruptcy...

Some interesting articles to peruse (for those interested):

"The Unions Didn't Bankrupt Detroit, But Great American Cars Did":

http://www.forbes.co...rican-cars-did/

How it will work:

http://www.washingto...hat-comes-next/

So why is the city giving $283 million in public funds to assist building a new stadium for the Red Wings???

http://www.tsn.ca/nhl/story/?id=425869

[Electro Rock]

The thing with Detroit, is that even if it somehow became an economic powerhouse again it would still have trouble attracting people due to the climate.

All else being equal, most people would choose the Sunbelt, or at least a milder climate somewhere, over that of Michigan.

[canucks#01fan]

[Canucks_fo_life]

[DonLever]

looking at the above video, Detroit should lure hollywood to make films there. Perfect for end of the world movies, zombie movies, nuclear holocaust movies, disaster movies like tornados, hurricane, earthquakes. Don't have to build sets. Just blow them up.