The city Detroit has filed the largest municipal bankruptcy in U.S. history, seeking Chapter 9 protection from creditors and unions owed some $18.5 billion in debt and liabilities.
According to The Detroit News, the 16-page petition was filed in U.S. Bankruptcy Court in Detroit Thursday afternoon, beginning a 30-to-90 day evaluation period to determine if the city is eligible for Chapter 9.
The News says:
“Under state law, [Gov. Rick] Snyder is required to approve a Chapter 9 filing. As of Wednesday, Snyder said he had not received any such request from Detroit Emergency Manager Kevyn Orr. Sources close to the governor said the situation is fluid, adding that Snyder intends to study Orr’s recommendations and related documents ‘for a couple of days’ before making his decision.”
The Associated Press says that “if approved, the filing would allow Orr to liquidate city assets to satisfy a host of creditors and city pensioners lined up to recoup losses from bad bond investments and unpaid contracts.”
“A judge in Ingham County, where the state capital Lansing is located, has scheduled a hearing Monday on a proposed injunction that would prevent Orr from a bankruptcy filing.
City retirees and workers made arguments in the two lawsuits that Orr’s plan to slash vested pensions for city retirees would violate strong protections in the Michigan constitution for retirement benefits of public-sector workers.
The pension funds’ lawsuit makes similar claims. It also was filed in Ingham County Circuit Court, by the city’s two funds - the General Retirement System and the Police and Fire Retirement System.”