Detroit Bankruptcy Plan Approved by Judge

Detroit
Federal Judge Steven Rhodes has handed down a ruling approving the plan submitted to resolve the Chapter 9 Bankruptcy filed by Detroit, the largest bankruptcy by a municipality in United States history. This plan will allow the city to cut 74 percent of the unsecured debt held, and release cash to be used for city services. This plan empowers the city to cut more than $7 billion in liabilities, allowing them to spend a projected $1.4 billion in services over the next 10 years. This number could increase significantly if moves to cut governmental waste and inefficiency are implemented as planned and are effective.

With most of the city’s major creditors agreeing to the proposal and pledging support, this plan is expected to have Detroit out of bankruptcy in a matter of weeks. It also addresses the concerns of city workers who were challenging plans to cut pensions and benefits by allowing the city to receive help from nonprofit organizations to reduce the severity and extent of the planned cuts. It also prevents the need to sell any of the art objects from the Detroit Institute of Arts, as had previously been suggested as a way of addressing the debt. While the historic decision to approve this bankruptcy plan has not met with unilateral support, it presents a solution which a majority of the concerned parties feels will benefit Detroit, allow the city to move forward in a manner which will improve the quality of life for residents.

By Jim Malone

Source:
DetroitFreePress
Image courtesy of Thomas Hawk – Flickr License

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