Last week, Detroit filed for bankruptcy protection, becoming the largest city in U.S. history to do so. However, a late challenge to the legality of their claim could put an abrupt halt to the filing by the insolvent city.
After years of corruption and mismanagement, Detroit is in debt to the tune of $18.5 billion dollars. As a last resort, the city filed for bankruptcy to protect them from nearly 100,000 creditors, including the Police and Fire Retirement System and the General Retirement System and its 20,000 retirees — groups that are relying on Detroit to make good on their pension and health benefits.
On Friday, a local county court ruled that Detroit’s bankruptcy filing must be withdrawn because it violates the Michigan Constitution and state law. However, an appeal by Michigan Attorney General Bill Schuette pointed out that because the bankruptcy case was filed in federal court, a state court has no jurisdiction and cannot override the case now that it is in federal hands. The interpretations of the law has set the stage for months, if not years of legal wrangling.
Detroit’s emergency city manager Kevyn Orr and Michigan Gov. Rick Snyder have taken to a series of public appearances and meetings explaining why it was necessary for Detroit to file for bankruptcy protection, and how the lengthy process will affect the city’s residents, workers and retirees. They hope to make the case that bankruptcy was long overdue and will be the only way to resolve the city’s billions of dollars of debt.
You said it right DJ when you said years of corruption and mismanagement. I don't see how they recover from all that.