Detroit Plans To File Bankruptcy Friday; Will Be Largest In History

Detroit

Even the dystopian future-Detroit depicted in “Robocop” never got this bad. The Detroit Free Press reports that the city is set to file for federal protection tomorrow, making it “the largest municipal bankruptcy in U.S. history”:

The filing would begin a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.

Detroit Emergency Manager Kevyn Orr, who in June released a plan to restructure the city’s debt and obligations that would leave many creditors with much less than they are owed, has warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection.

Gov. Rick Snyder would have to sign off on the filing. A spokeswoman did not immediately return telephone calls today.

Jefferson County, Ala., and Stockton, CA., have also filed for federal bankruptcy protection, and were — prior to Detroit — the largest municipal counties to do so. But with roughly 700,000 residents and nearly $20 billion in debts and liabilities, Detroit will undoubtedly set the benchmark for the way failed cities nationwide decide to take care of their financial woes.

UPDATE

Forget Friday, Detroit has officially filed for chapter 9 bankruptcy, making it the largest city in history to do so.

(photo by Laughlin Elkind)

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