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.
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

Turkey: No Ransom Paid for Release of Hostages Held by IS Militants

President Erdogan hails release of hostages as diplomatic success but declines to be drawn on whether their release freed Ankara's hand to take more active stance against insurgents More

Audio Sierra Leone Ends Ebola Lockdown

Health ministry says it has reached 75 percent of its target of visiting 1.5 million homes to locate infected, educate population about virus More

US Pivot to Asia Demands Delicate Balancing Act

As tumult in Middle East distracts Obama administration, efforts to shift American focus eastward appear threatened 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.
Natural Gas Export Plan Divides Maryland Towni
X
Deborah Block
September 21, 2014 2:12 PM
A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Alibaba Shares Soar in First Day of Trading

China's biggest online retailer hit the market Friday -- with its share price soaring on the New York Stock Exchange. The shares were priced at $68, but trading stalled at the opening, as sellers held onto their shares, waiting for buyers to bid up the price. More on the world's biggest initial public offering from VOA’s Bernard Shusman in New York.
Video

Video Obama Goes to UN With Islamic State, Ebola on Agenda

President Obama goes to the United Nations General Assembly to rally nations to support a coalition against Islamic State militants in Iraq and Syria. He also will look for nations to back his plan to fight the Ebola virus in West Africa. As VOA White House correspondent Luis Ramirez reports, Obama’s efforts reflect new moves by the U.S. administration to take a leading role in addressing world crises.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid