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.”
Snyder described the city’s $18 billion in debt and unfunded liabilities as “unsustainable,” saying that 38 cents of every dollar of city income is going toward debt repayment, legacy costs, and other obligations.
The slow march leading to this decision started in March when Snyder named Kevyn Orr, a restructuring specialist and University of Michigan graduate who represented Chrysler during its 2009 bankruptcy, as the Motor City’s emergency financial manager. Snyder said he received Mr. Orr’s recommendation to file for Chapter 9 bankruptcy on Tuesday.