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Trial: Is Detroit eligible for bankruptcy?

First Published Oct 23 2013 09:53AM      Last Updated Oct 23 2013 09:55 am
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"The city’s restructuring must provide a foundation for the city to begin to provide basic, essential services to its residents in a reliable fashion," Orr said in July when he took Detroit into bankruptcy. "Without this, the city’s death spiral ... will continue."

Orr’s team estimates that 65 percent of Detroit’s annual revenue would be eaten up in debt payments by 2017 without an overhaul in bankruptcy court. Miles away from court, countless streets are bleak: By last spring, at least 16,700 structures were inspected and classified as dangerous. Thousands of streetlights are dark.

Private donors are replacing ambulances that limp around with more than 200,000 miles. The fire department has just one mechanic for every 39 fire vehicles. The number of Detroit parks has dropped to about 60 in recent years from more than 300, due to a lack of money.



University of Michigan law professor John Pottow said unions and pension funds are aggressively challenging the city because they lose leverage if the judge finds the Chapter 9 filing was proper. Detroit would take the lead in coming up with a plan to bring the city out of bankruptcy, putting pensions at risk along with billions owed to other creditors.

"It makes denial and rationalization harder for people who want this to go away," Pottow said.

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Follow Ed White at http://twitter.com/edwhiteap.

 

 

 

 

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