Today, Detroit became the largest U.S. city to file for bankruptcy, marking a new low for the metropolitan area that was once the heart of America’s automobile industry.
According to reports, the Motor City is estimated to be $18.5 billion in debt, and if the bankruptcy is approved by a federal judge, then thousands of creditors will be forced to make negotiations with the city’s Emergency Manager Kevyn Orr.
Governor Rick Snyde said that Detroit, Michigan’s largest city, was forced to file for Chapter 9.
“This is a difficult step, but the only viable option to address a problem that has been six decades in the making,” he said. “I think it will also be the foundation of the city’s future — a statement I cannot make in confidence absent giving the city a chance for a fresh start, without burdens of debt it cannot hope to fully pay.”
He went on to list a few statistics that have hampered the cities’ operations:
• The city’s unemployment rate has nearly tripled since 2000 and is more than double the national average.
• The homicide rate is at historically high levels, and the city has been named among America’s most dangerous for more than 20 years.
• Detroiters wait an average of 58 minutes for police to respond, compared with the national average of 11 minutes.
• An estimated 40% of the city’s street lights didn’t work in the first quarter of 2013.
• Roughly 78,000 city structures have been abandoned.
USA Today reports, “the filing begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.”
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