Business
Detroit: City manager Kevyn Orr files bankruptcy on behalf of city in Federal Court
Kevyn Orr. PHOTO/Jones Day/AP
Detroit, once the very symbol of American industrial might, became the biggest U.S. city to file for bankruptcy Thursday, its finances ravaged and its neighborhoods hollowed out by a long, slow decline in population and auto manufacturing.
Kevyn Orr, a bankruptcy expert hired by the state of Michigan in March to stop the city’s fiscal free-fall made the filing Thursday in federal bankruptcy court.
Orr had hoped to help Detroit avoid bankruptcy, but that now it is time to “face the fact that the City cannot and is not paying its debts as they become due and is insolvent.” The White House said President Barack Obama is closely monitoring the situation.
“While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America’s great cities,” White House spokeswoman Amy Brundage said.
Detroit stopped making payments on some of its US$18.5 billion of debt and obligations last month as the emergency manager sought relief from creditors.
But the city’s employee pension plans — which are owed some nine billion dollars — filed a lawsuit to prevent any cuts to retirement benefits. The bankruptcy filing places that case on hold and comes days before what could have been a key hearing.
Detroits’ problems have piled up for generations. In the 1950s, its population grew to 1.8 million people, many of whom were lured by plentiful, well-paying auto jobs. Later that decade, Detroit began to decline as developers starting building suburbs that lured away workers and businesses.
