News / USA

In Bankruptcy, Detroit Cedes Control, Gains a Respite

Detroit Emergency Manager Kevyn Orr addresses the media as Michigan Governor Rick Snyder listens during a news conference about filing bankruptcy for the city of Detroit in Detroit, Michigan, July 19, 2013.
Detroit Emergency Manager Kevyn Orr addresses the media as Michigan Governor Rick Snyder listens during a news conference about filing bankruptcy for the city of Detroit in Detroit, Michigan, July 19, 2013.
TEXT SIZE - +
VOA News
By filing for bankruptcy, debt-ridden Detroit is buying itself some time to fix its finances, but it also is giving up financial control of its government and handing it to a federal judge.

Law professor Peter Henning at Wayne State University in Michigan said the judge, not the city's elected officials, will be making important decisions about the city's future.
 
"Really, what it is, it's a watershed moment because no longer is it just the emergency manager and the various constituencies in the city. Now it's under the power of the federal judge, and so the decision-making is really out of the control of the people who had a say in the process before," Henning said. "Now what you're talking about is a federal bankruptcy judge deciding who's going to get paid and how much they're going to get paid."

Watch related video by Mil Arcega:

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.

Detroit calls itself the Motor City, the home of the American auto industry. But as Americans fell in love with foreign auto imports from Japan and Germany over the last 30 years, Detroit declined. Its population plummeted over several decades and many of its neighborhoods collapsed in decay and abandonment.

As the city's influence as an industrial center waned over the last half century, its elected officials mismanaged the local government, with one of its mayors sent to prison in a sex scandal. Now the city's debt stands at $18 billion or more.

A business and law professor at the University of Michigan, Erik Gordon, told VOA that the city is now paying for its misdeeds. "We had a mayor who was sent to jail, was sent back to jail. We had a city council that for many years was composed mostly of clowns," he noted. "We had a city that was living in fantasyland and that catches up with you. And it caught up with Detroit."

He said American automakers totally misread the allure of foreign-made cars, which over time diminished the city's standing as a symbol of American industrial muscle.

"I can remember when the first cars came over from Japan, and the Detroit automakers and the people in Detroit called those cars rice runners and said nobody will ever buy them," explained Gordon. "You know, times change and you have to face up and you have to compete. Detroit during the best of times got sort of fat and lazy and that's how you fall behind."

The Michigan academic said that by filing bankruptcy, the city will gain time to reassess its finances, although many creditors are unlikely to be paid anything close to what they are owed.

"The idea behind bankruptcy in America is a fresh start. So if you have a city or a company that you think is viable, that you think could go forward if only you get a little bit of a fresh start, you go into bankruptcy with a court-supervised procedure, actually specialized courts, bankruptcy courts, that act as referee, with special powers to get things settled, including some interesting powers to tell debtors that you may be owed $100, but you're only going to get $10," said Gordon.

He said he expects that Detroit will eventually emerge from bankruptcy as a renewed city focusing on the growth of technology businesses and less on its industrial past.

You May Like

Multimedia Anti-Keystone XL Protests Continue

Demonstrators are worried about pipeline's effect on climate change, their traditional way of life, health and safety More

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 More

This forum has been closed.
Comment Sorting
Comments
     
by: Yoshi from: Sapporo
July 20, 2013 9:08 PM
I think if GM had pruduced more cars in Detroit and hired local workers, Detroid would have not been bunkrupted. Toyota is located in Nagoya city and a lot of citizens work for its car industries. Toyota is makng efforts to produce car parts inside Japan as much as possible eventhough it is expensive in wages compared with oversea production.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid