Long-suffering Detroit finally turns to bankruptcy -- Associated Press

[bsteadman]

Long-suffering Detroit finally turns to bankruptcy

Associated Press
Corey Williams and Ed White
7/19/2013

Excerpt:

DETROIT (AP) -- At the height of its industrial power, Detroit was an irrepressible engine of the American economy, offering well-paying jobs, a gateway to the middle class for generations of autoworkers and affordable vehicles that put the world on wheels.

But by Thursday, the once-mighty symbol of the nation's manufacturing strength had fallen into financial ruin, becoming the biggest U.S. city ever to file for bankruptcy - the result of a long, slow decline in population and auto manufacturing.
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View the complete article at:

http://hosted.ap.org/dynamic/stories...OIT_BANKRUPTCY

[bsteadman]

Free Republic is running a thread titled, 'Detroit emergency manager files bankruptcy (AP Breaking)', which was started 7/18/2013 by 'tcrlaf'

The thread references a 7/18/2013 (revised later to 7/19/2013) AP article written by Corey Williams and Ed White - http://hosted.ap.org/dynamic/stories...OIT_BANKRUPTCY

View the complete Free Republic thread at:

http://www.freerepublic.com/focus/f-news/3044641/posts

[bsteadman]

Record Bankruptcy for Detroit

Motor City 'Is Broke,' Governor Says, as It Seeks to Restructure $18 Billion in Debt

Wall Street Journal
Matthew Dolan
Updated 7/19/2013

Excerpt:

DETROIT—The city of Detroit filed for federal bankruptcy protection Thursday after decades of decline, a new low for a city that once defined industrial America's might but was hollowed out by the flight of residents and businesses to the suburbs.

The filing by the automobile capital and onetime music powerhouse—which has liabilities of more than $18 billion—is the country's largest-ever municipal bankruptcy case.

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A Long, Sad Decline

• Detroit's population fell more than 26% from 2000 to 2012 and totals about 700,000—down from almost two million in 1950, according to the census.
• An estimated 40,000 structures or land parcels sit vacant or empty.
• The city spent $100 million more than it took in every year since 2008, on average—borrowing the rest.
• Some 36% of Detroiters lived below the poverty level between 2007 and 2011, the census found.
• In 2012, Detroit had the highest violent crime rate for a city with more than 200,000 residents, the FBI says.

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The move to restructure the debt is bound to set off months, if not years, of legal wrangling, asset sales and cuts to benefits for Detroit workers and retirees, including 20,000 on city pensions. Owners of the city's bonds are expected to battle with retirees and others for pieces of the city's diminished wealth.

Detroit is no stranger to bankruptcy after two of its most prominent companies—General Motors Co. GM -0.42% and Chrysler Group LLC—entered and quickly exited Chapter 11 bankruptcy in 2009, thanks to an $80 billion federal bailout.

But without a similar rescue—which the White House has indicated isn't forthcoming—Thursday's filing is fundamentally different and potentially much more treacherous for the city, officials and experts said. It casts the nation's 18th largest city into largely uncharted legal waters because few municipalities—and none this size—have undergone financial reorganization.

"I am terrified, and I am nervous," said Vaughn Derderian, the 36-year-old manager of the Anchor Bar, a fixture in downtown Detroit. "It is like being on a speeding freight train and you have no idea where it's going to go."

Detroit has shrunk from its peak population of nearly two million in 1950 to about 700,000 today. Damaged by cuts in state aid and a crash in real-estate values that crimped tax revenue, Detroit in recent years borrowed to meet operating costs as well as long-term liabilities such as pensions and health insurance for city workers.

The city's unemployment rate has nearly tripled since 2000 and is more than double the national average. Detroit's homicide rate is at the highest level in nearly 40 years, and it has been named as one of the most dangerous cities in America for more than 20 years.

Kevyn Orr, state-appointed emergency city manager, assured nothing will change for Detroit citizens after the city filed for federal bankruptcy protection.

Its citizens wait an average of 58 minutes for the police to respond to their calls, compared to the national average of 11 minutes. Only 8.7% of cases are solved, compared to a statewide average of 30.5%.

The Chapter 9 filing in U.S. Bankruptcy Court for the Eastern District of Michigan came after Kevyn Orr, the city's emergency manager, failed to reach agreements with enough of the bondholders and other creditors to restructure Detroit's debt outside of court.

The final decision rested with Republican Gov. Rick Snyder, who appointed Mr. Orr, a bankruptcy lawyer who had helped steer Chrysler through its 2009 reorganization, as the city's financial overseer in March.

"This was a difficult and painful decision, but I believe there are no other viable options," said Mr. Snyder in a video on Michigan's official website. "This is a situation that's been 60 years in the making in terms of the decline of Detroit. From a financial point of view, let me be blunt: Detroit is broke."
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View the complete article at:

http://online.wsj.com/article/SB1000...173709204.html