News / USA

Detroit Becomes Largest US City to File Bankruptcy

Experts: Bankruptcy May Give Detroit Chance to Start Freshi
X
July 20, 2013 2:40 AM
Detroit, once the prosperous home of the U.S. auto industry, has gone bankrupt. It is the largest city in U.S. history to seek protection from creditors while it negotiates a plan to reorganize. Detroit's troubles reflect the loss of manufacturing jobs and much of its population and tax base. Despite legal wrangling over the filing, experts look at how Detroit's bankruptcy compares with other financially troubled municipalities. Mil Arcega has more for VOA.
Mil Arcega explains how Detroit's bankruptcy compares with other financially troubled municipalities.
VOA News
Detroit, once the symbol of American industrial power, has become the largest city in U.S. history to file for bankruptcy, a victim of its declining population and faltering auto industry.
 
A half-century ago, Detroit stood at the center of the country's booming auto industry and boasted a population of 1.8 million people, many of them assembly line factory workers drawn to the city by wages that led to a middle-class life. But when a state-appointed fiscal manager filed the city's bankruptcy papers Thursday, Detroit's population had dwindled to 700,000. Many of its neighborhoods are deserted and houses boarded up.
 
The bankruptcy filing gives the city protection from its creditors. Detroit Mayor Dave Bing said he hopes the move will mark a new beginning for the city, which has been struggling with a budget deficit of more than $300 million and long-term debt that may total $18 billion or more.

  • 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.

​"This is a very, very difficult day for me as I am sure it is for a lot of our citizens here in the city of Detroit," he said. "When I took office over four years ago, I said Detroit was in a financial crisis and we tried to work our way through this situation over the last four years. But it has been very, very difficult."
 
In March, Michigan Governor Rick Snyder hired fiscal manager and bankruptcy expert Kevyn Orr to oversee Detroit's troubled finances, making it the largest U.S. city under state supervision. Orr said it soon became obvious that Detroit was on an unsustainable financial path.

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 reality is, that even a casual observer — a casual observer — has had to understand for some period of time now that Detroit simply was not on a sustainable footing, continuing to borrow, continuing to defer pension payments, continuing not to pay its bills on time, continuing a deepening insolvency."
 
Governor Snyder said the bankruptcy filing will give Detroit a chance to recover.
 
"Now is our opportunity to stop 60 years of decline," he said.
 
It is not entirely clear what happens next for the city. Orr said the city will maintain basic services, such as police and fire protection. But many of the city's street lights have already been cut off. The bankruptcy declaration also casts doubt about the future of public employee pensions and health care plans in Detroit, which has about 10,000 city employees.
 
A bankruptcy judge will be appointed to oversee the city's finances. Eventually, many of the city's creditors might only receive pennies on the dollar of the money they are owed.
 
Settlement of the case is expected to take a lengthy period of time, likely more than a year.

You May Like

Changing Under Pressure, IS ‘Potent’ as Ever

US intel officials describe Ramadi's fall as concerning, but say it isn't emblematic of larger effort to degrade IS capabilities More

Nigeria Fuel Shortage Shows Fragility of Africa’s Oil Giant

Although it is the largest oil producer in Africa, country has nearly ran out of fuel it needs to power its generators, cars and airplanes over the past week More

Arrested Football Officials Come Mainly From the Americas

US Justice Department alleges defendants participated in 24-year scheme to enrich themselves through corruption of international soccer More

This forum has been closed.
Comment Sorting
Comments
     
by: Tony from: Boston, MA
July 19, 2013 1:57 PM
Debunk the Myths in Investing (from amazon):
The state employees can receive most of the salaries in retirement plus many goodies. Most are lazy or become lazy from their tiny work loads. If you work too hard, your boss will be threatened. I know as I worked for the Federal Reserve. We had pool tables, exercise rooms... I was hired because of my knowledge of a mini computer that was used in a major project. I quit as the life would be meaningless and I would become stupid and lazy as the rest of the workers.

Most are not smart (or become stupid after taking too many afternoon laps). To illustrate with accounting graduates, the smart ones go to Big 10, and the bottom ones go to work for the state. How come the stupid and lazy ones get better compensation (not to mention their long vacation days)? Most corporations do not have pension these days and they have to work hard to keep their jobs.

It extends to state and government employees not just cities. I may have offended many here esp. those government workers spending all day in surfing the net. Fight for the justice but not against those rich folks who work/study hard, take chances, save hard...

by: Ricky from: Italy
July 19, 2013 10:49 AM
It is not too big to fail?

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
3D Printer Makes Replica of Iconic Sports Cari
|| 0:00:00
...    
🔇
X
George Putic
May 27, 2015 9:31 PM
Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video US Voters Seek Answers From Presidential Candidates on IS Gains

The growth of the Islamic State militant group in Iraq and Syria comes as the 2016 U.S. presidential campaign kicks off in the Midwest state of Iowa.   As VOA’s Kane Farabaugh reports, voters want to know how the candidates would handle recent militant gains in the Middle East.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Film Festival Looks at Indigenous Peoples, Culture Conflict

A recent Los Angeles film festival highlighted the plight of people caught between two cultures. Mike O'Sullivan has more on the the Garifuna International Film Festival, a Los Angeles forum created by a woman from Central America who wants the world to know more about her culture.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video US-led Coalition Gives Some Weapons to Iraqi Troops

In a video released Tuesday from the Iraqi Ministry of Defense, Iraqi forces and U.S.-led coalition troops survey a cache of weapons supplied to help Iraq liberate Mosul from Islamic State group. According to a statement provided with the video, the ministry and the U.S.-led coaltion troops have started ''supplying the 16th army division with medium and light weapons in preparation to liberate Mosul and nearby areas from Da'esh (Arabic acronym for Islamic State group).''
Video

Video Amnesty International: 'Overwhelming Evidence' of War Crimes in Ukraine

Human rights group Amnesty International says there is overwhelming evidence of ongoing war crimes in Ukraine, despite a tentative cease-fire with pro-Russian rebels. Researchers interviewed more than 30 prisoners from both sides of the conflict and all but one said they were tortured. Henry Ridgwell reports for VOA from London.
Video

Video Washington Parade Honors Those Killed Serving in US Military

Every year, on the last Monday in the month of May, millions of Americans honor the memories of those killed while serving in the armed forces. Memorial Day is a tradition that dates back to the 19th Century. While many people celebrate the federal holiday with a barbecue and a day off from work, for those who’ve served in the military, it’s a special day to remember those who made the ultimate sacrifice. Arash Arabasadi reports for VOA from Washington.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.
Video

Video Rolling Thunder Run Reveals Changed Attitudes Towards Vietnam War

For many US war veterans, the Memorial Day holiday is an opportunity to look back at a divisive conflict in the nation’s history and to remember those who did not make it home.
Video

Video Female American Soldiers: Healing Through Filmmaking

According to the United States Defense Department, there are more than 200-thousand women serving in the U.S. Armed Forces.  Like their male counterparts, females have experiences that can be very traumatic.  VOA's Bernard Shusman tells us about a program that is helping some American women in the military heal through filmmaking.

VOA Blogs