Stillwater News Press

Our World

July 19, 2013

Detroit files for bankruptcy

DETROIT —

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 neighborhoods 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.
 
The filing marked a turning point for city and state leaders, who must now confront the challenge of rebuilding Detroit's broken budget in as little as a year.
 
Kevyn Orr, a bankruptcy expert hired by the state in March to stop the city's fiscal free-fall, said Detroit would continue paying its bills and employees.
 
But, said Michael Sweet, a bankruptcy attorney in Fox-Rothschild's San Francisco office, "they don't have to pay anyone they don't want to. And no one can sue them."
 
The city's woes 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.
 
Then beginning in the late 1960s, auto companies began opening plants in other cities. Property values and tax revenue fell, and police couldn't control crime. In later years, the rise of autos imported from Japan started to cut the size of the U.S. auto industry.
 
By the time the auto industry melted down in 2009, only a few factories from GM and Chrysler were left. GM is the only one with headquarters in Detroit, though it has huge research and testing centers with thousands of jobs outside the city.

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