News / USA

Detroit Seeks Path to Solvency

Detroit Becomes Largest US City to Declare Bankruptcyi
X
July 19, 2013
After years of population decline, a faltering auto industry and financial mismanagement by the city's government, Detroit has filed for Chapter 9 bankruptcy protection in federal court. It's the largest municipal bankruptcy in U.S. history, with the city listing more than 100,000 creditors. As VOA's Kane Farabaugh reports that Detroit's financial fate now rests in the hands of a bankruptcy judge as a local judge tries to block the move.
TEXT SIZE - +
Kane Farabaugh
— After years of population decline, a faltering auto industry and financial mismanagement by the city's government, Detroit has filed for Chapter 9 bankruptcy protection in federal court. It's the largest municipal bankruptcy in U.S. history, with the city listing more than 100,000 creditors. Detroit's financial fate now rests in the hands of a bankruptcy judge as a local judge tries to block the move.

As talks broke down with some of Detroit’s major creditors, Michigan Governor Rick Snyder told reporters the state of Michigan was out of options. “The city is basically broke,” he said.

Detroit’s bankruptcy petition, filed by state appointed Emergency Manager Kevyn Orr, lists the General Retirement System and the Police and Fire Retirement System of Detroit as two of the largest creditors, with a combined $2.5 billion in unfunded liabilities.  

Orr estimates the city’s annual budget deficit at more than $300 million, with it’s long-term debt close to $20 billion. It’s money the city simply doesn't have.

“What shocked me was the tolerance of this behavior for decades. This has been going on for a very long time, and to say the least, it is at best unorthodox in terms of how these things were going,” said Orr.

Other Municipal bankruptcies in the US

  • City of San Bernardino, California filed 8/01/2012.  Debt = $46 Million
  • City of Stockton, California filed 6/28/2012.  Debt = $26 Million
  • Jefferson County, Alabama filed 1/9/2011.  Debt = $4 Billion
  • Central Falls, Rhode Island filed 8/1/2011.  Debt = $21 Million
The bankruptcy is another blow to Detroit. Resident Everett Cottrell said the city has struggled to shed its image of urban blight and  perpetual decay.

"They [outsiders] think Detroit is a dump. No respect. It's a dump now. Big old Detroit can't even handle its own business? That's sad," said Cottrell.

Leland Harrison, another resident, blames Detroit’s fiscal mess on neglect by city leaders. He sees Emergency Manager Orr’s bankruptcy filing as a last resort.

"Well, they've had enough time to straighten it out. So I guess, as they say, 'if you can't handle it yourself, someone else will.' So I guess they did," said Harrison.

Some residents are concerned city assets could be liquidated to help pay the bills, including the large collection of paintings, sculptures and historic artifacts at the Detroit Institute of Arts. One piece is the puppet "Howdy Doody" from the iconic children’s TV show of the 1950s.  

Orr tried to allay concerns. “Right now there is nothing for sale, including Howdy Doody,” he said.

But no bets are off the table. The fate of the city’s assets rests with a federal bankruptcy judge, who has yet to be appointed.

  • Inside the abandoned and decaying manufacturing plant of Packard Motor Car in Detroit, Michigan.
  • General Motors' world headquarters is the tallest building along the Detroit skyline.
  • Vacant and blighted homes in an eastside neighborhood of Detroit, Michigan.
  • Carla Lyons holds her bidders card as nearly 9,000 foreclosed Detroit area properties are being auctioned off at the International Center Building in Detroit. Picture taken October 19, 2009.
  • The inside of the abandoned "Martyrs of Uganda Catholic Church in Detroit. When a Catholic church closes, the land and buildings go back to the archdiocese. If a new tenant doesn't materialize, criminals sometimes do.
  • Tony Majka uses his iPhone to photograph inside an abandoned home in Detroit. Under the name "Tony Detroit," he's been taking photos of the city's many abandoned structures with an iPhone and posting them on Instagram. The simple shots of Detroit's desolation has earned him better than 300,000 followers.
  • June, 1983: An employee works on the assembly line at the Cadillac carmaker plant in Detroit.
  • The abandoned Packard Motor Car Company building that ceased production in the 1950's.
  • Graffiti in downtown Detroit.
  • A crushed vehicle at U.S. Auto Supply in Detroit.
  • People look for clothes at the Capuchin Soup Kitchen service center in Detroit, where hundreds of people receive food and supplies every day.
  • Christopher Dodd (L), chairman of the U.S. Senate Banking Committee and Sen. Richard Shelby (R-AL) listen to testimony from the leaders of the big Detroit automakers during hearing on a financial assistance package in Washington, December 2008.
  • Abandoned brick homes on the east side of Detroit.
  • Detroit Mayor Dave Bing (left) speaks at a news conference, July 18, 2013. State-appointed emergency manager Kevyn Orr is on the right.

You May Like

Algerians Vote in Presidential Election

There were few media reports of protests and clashes around the country, but so far no significant violence More

Sharks More Evolved than Previously Thought

The discovery could “profoundly affect our understanding of evolutionary history” More

Pakistan Military Asked to Protect Polio Workers

Request comes as authorities say a Taliban ban on vaccinations in 2012 and deadly attacks on anti-polio teams have prevented thousands of children from getting inoculated More

This forum has been closed.
Comment Sorting
Comments
     
by: Yoshi from: Sapporo
July 22, 2013 1:08 AM
How come Detroit has fallen to bunkrupcy? Some one would say Japanese cars has sold too much in America. Some one would say extreme open marcket has broken down Detroit's major industry. Who can say it is completely idiot to think abot to return to commercial protectionism? US must have enough domestic marcket for its firms to employ national workers, manage pubric utilities and offer welfare survices. US stands at a favorable position than us Japan in terms of tolerance to protectionism.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Google Buys Drone Companyi
|| 0:00:00
...
 
🔇
X
George Putic
April 15, 2014
In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
Video

Video Ray Bonneville Sings the Blues and More on New CD

Singer/songwriter Ray Bonneville has released a new CD called “Easy Gone” with music that reflects his musical and personal journey from French-speaking Canada to his current home in Austin,Texas. The eclectic artist’s fan base extends from Texas to various parts of North America and Europe. VOA’s Greg Flakus reports from Austin.
Video

Video Millions Labor in Pakistan's Informal Economy

The World Bank says that in Pakistan, roughly 70 percent work in the so-called informal sector, a part of the economy that is unregulated and untaxed. VOA's Sharon Behn reports from Islamabad on how the informal sector impact's the Pakistani economy.
Video

Video Passover Celebrates Liberation from Bondage

Jewish people around the world are celebrating Passover, a commemoration of their liberation from slavery in Egypt more than 3,300 years ago. According to scripture, God helped the Jews, led by Moses, escape bondage in Egypt and cross the Red Sea into the desert. Zlatica Hoke reports that the story of the Jewish Exodus resonates with other people trying to escape slave-like conditions.
Video

Video Police Pursue Hate Crime Charges Against Kansas Shooting Suspect

Prosecutors are sifting through the evidence in the wake of Sunday’s shootings in a suburb of Kansas City, Missouri that left three people dead. A suspect in the shootings taken into custody is a white supremacist. As VOA’s Kane Farabaugh reports, he was well-known to law enforcement agencies and human rights groups alike.
Video

Video In Eastern Ukraine, Pro-unity Activists Emerge from Shadows

Amid the pro-Russian uprisings in eastern Ukraine, there is a large body of activists who support Ukrainian unity and reject Russian intervention. Their activities have remained largely underground, but they are preparing to take on their pro-Moscow opponents, as Henry Ridgwell reports from the eastern city of Donetsk.
Video

Video Basket Maker’s Skills Have World Reach

A prestigious craft show in the U.S. capital offers one-of-a-kind creations by more than 120 artists working in a variety of media. As VOA’s Julie Taboh reports from Washington, one artist lucky enough to be selected says sharing her skills with women overseas is just as significant.
Video

Video UN Report Urges Speedier Action to Avoid Climate Disaster

A new United Nations report says the world must switch from fossil fuels to cleaner energy sources to control the effects of climate change. The Intergovernmental Panel on Climate Change released the report (Sunday) following a meeting of scientists and government representatives in Berlin. The comprehensive review follows two recent IPCC reports that detail the certainty of climate change, its impacts and in this most recent report what to do about it. VOA’s Rosanne Skirble has the details.
AppleAndroid