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Court OKs Detroit bankruptcy

 

DETROIT Bankruptcy

CHICAGO (AFP) – The city of Detroit won judicial approval to move forward with the largest municipal bankruptcy in US history Tuesday despite objections from city workers fearful of losing their pensions.

Saddled with more than $18 billion in debt and a tax base depleted by decades of population loss and urban blight, the birthplace of the US auto industry has been so strapped for cash it can’t even keep the street lights on.

It filed for bankruptcy protection in July, the largest US city ever to do so.

After lengthy initial hearings and weeks of deliberation, Judge Steven Rhodes ruled Detroit is eligible to restructure its debt and liabilities under Chapter 9 of the US bankruptcy code.

The decision was immediately appealed by the city’s largest public sector union.

It was hailed by Michigan Governor Rick Snyder as the only “viable” w ay for Detroit to “stay on the path toward a brighter future.”

“There will be other difficult decisions as we work through this process,” Snyder said in a statement. “But Michigan and Detroit are resilient and are the comeback stories in the country. Working together we can and will make sure that reinvention happens.”

In an unusual move, Rhodes explained his decision in a court hearing prior to releasing his complex 140-page opinion.

Bankruptcy was a “foregone conclusion” and should have happened years ago, Rhodes told the packed courtroom.

“The city no longer has the resources to… provide its citizens basic services,” the Detroit News quoted Rhodes as saying. “To reverse this decline and attract new residents and revitalize and reinvigorate, Detroit needs help.”

Thousands of retired city workers are fearful they will be pushed into poverty if Detroit is able to slash their pension benefits, which are supposed to be protected by the Michigan state constitution.

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