Detroit bankruptcy: Governor authorizes filing, declaring 'no viable alternative' (+video)
The Detroit bankruptcy filing, which follows a decades-long decline in city finances that led to $18 billion in debt, sets the stage for a showdown with 43 public sector unions facing a drastic cut in pensions.
Detroit filed for bankruptcy Thursday, the largest municipal bankruptcy case in US history. The move followed a state-led intervention to revive the city’s finances, which had been failing for decades.
The historic filing is “recognition [Detroit] hit bottom, and it’s an opportunity to get a roadmap back to restructure itself and become [a city] that has a chance to right-size itself,” says Douglas Bernstein, a managing partner of Plunkett Cooney, a law firm in Bloomfield Hills, Mich. that specializes in bankruptcy law.
“That’s not to say it will be simple and not without pain,” he says, “but it’s recognition that things have to change.”
Among the reasons for the bankruptcy: systemic population loss, including from residential flight; high unemployment; a sharp decline in real estate values; and chronic corruption and mismanagement.
Gov. Rick Snyder authorized the petition, which was filed late Thursday afternoon in US Bankruptcy Court in Detroit. A press conference is scheduled for 10 a.m. EST Friday.
“This was a difficult decision, but clearly the right decision in my view because we have no viable alternative,” Governor Snyder, a Republican, told reporters in a brief teleconference late Thursday. “We have a great city, but a city that’s been going downhill for the last 60 years. This is an opportunity to say enough is enough.”
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