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

Lesotho Faces New Round of Violence, Political Crisis

Brutal killing of military officer has sent former leaders back into S. Africa where they're watching anxiously as regional officials head in to try to restore peace More

Video US Diplomat Expects Adoption of Bosnian Massacre Anniversary Resolution

Samantha Power says there's broad consensus about killings in Bosnia's war, but Russia calls resolution 'divisive,' backs UN countermeasure More

UN Report Exposes Widespread Boko Haram Atrocities

Damning report graphically details pattern of vicious, widespread atrocities committed by Islamist militants 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.
Olympics Construction Scars Sacred Korean Mountaini
X
July 02, 2015 4:10 AM
Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video US Silica Sand Mining Surge Worries Illinois Residents, Businesses

Increased domestic U.S. oil and gas production, thanks to advances known as “fracking,” has created a boom for other industries supporting that extraction. Demand for silica sand, used in fracking, could triple over the next five years. In the Midwest state of Illinois, people living near the mines are worried about how increased silica sand mining will affect their businesses and their health. VOA’s Kane Farabaugh has more in this first of a series of reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Texas Defies Same-Sex Marriage Ruling

Texas state officials have criticized the US Supreme Court decision giving same-sex couples the right to marry nationwide. The attorney general of Texas says last week's decision did not overrule constitutional "rights of religious liberty," and therefore officials performing wedding services can refuse to perform them for same-sex couples if it is against their religious beliefs. Zlatica Hoke reports on the controversy.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.
Video

Video Saudi Leaks Expose ‘Checkbook Diplomacy’ In Battle With Iran

Saudi Arabia’s willingness to wield its oil money on the global diplomatic stage appears to have been laid bare, after the website WikiLeaks published tens of thousands of leaked cables from Riyadh’s Ministry of Foreign Affairs. VOA's Henry Ridgwell reports.
Video

Video In Kenya, Police Said to Shoot First, Ask Questions Later

An organization that documents torture and extrajudicial killings says Kenyan police were responsible for 1,252 shooting deaths in five cities, including Nairobi, between 2009 and 2014, representing 67 percent of all gun deaths in the areas reviewed. Gabe Joselow has more from Nairobi.

VOA Blogs