Stillwater News Press

Our World

July 19, 2013

Detroit files for bankruptcy

(Continued)

DETROIT —

 
Detroit lost a quarter-million residents between 2000 and 2010. Today, the population struggles to stay above 700,000.
 
The result is a metropolis where whole neighborhoods are practically deserted and basic services cut off in places. Looming over the crumbling landscape is a budget deficit believed to be more than $380 million and long-term debt that could be as much as $20 billion.
 
In recent months, the city has relied on state-backed bond money to meet payroll for its 10,000 employees.
 
"It's an embarrassment, number one, to come to the realization that we're actually in this situation," said Kevin Frederick, an admissions representative for a local career training school. "Not that we didn't see it coming. I guess we have to take a couple of steps backward to move forward."
 
Orr made the filing in federal bankruptcy court under Chapter 9, the bankruptcy system for cities and counties.
 
He was unable to persuade a host of creditors, unions and pension boards to take pennies on the dollar to help with the city's massive financial restructuring. If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
 
Orr said Thursday that he "bent over backward" to work with creditors, rejecting criticism that he was too rigid. "Anybody who takes that position just hasn't been listening."
 
The bankruptcy could last through summer or fall 2014, which coincides with the end of Orr's 18-month appointment, he said.
 
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.
 
Creditors and public servants "deserve to know what promises the city can and will keep," Snyder wrote. "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."

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