detroit files for bankruptcy, stage set for court fight
Detroit submitted the biggest-
Municipal bankruptcy in the United StatesS.
Thursday\'s history marks a new low in a city that used to be the cradle of America. S.
The auto industry and laid the foundation for a costly court battle with creditors.
If approved by a federal judge, bankruptcy would force thousands of Detroit creditors to negotiate with Kevin Orr, the city\'s emergency affairs manager, to settle an estimated $18 debt.
The debt that paralyzed Michigan\'s largest city is as high as 5 billion.
The future of retirement pensions and health benefits for thousands of urban workers is pending.
Investors pushed down the prices of Detroit bonds and bonds as applications were expected, bringing Thursday\'s yield to a record high.
In a letter filing the application, Michigan Governor Rick Snyder said that he had approved Orr\'s request for Chapter 9 bankruptcy protection, \"Detroit is simply unable to raise enough revenue to meet its current obligations, and this will only get worse without bankruptcy applications.
After the announcement, Republican Snyder said in a speech on Detroit Channel 4, \"Let\'s stop the decline.
Let\'s start to stabilize.
Let things go in the right direction.
Snyder appointed Orr during the parade to cope with the spiraling growth of the city
Fixed-term debt estimated at $18. 5 billion.
A White House spokesman said the Democratic PartyS.
President Obama and his senior team are keeping a close eye on the situation in Detroit.
\"While Michigan\'s leaders and the city\'s creditors understand that they have to find a solution to Detroit\'s serious financial challenges, we remain committed to continuing our strong partnership with Detroit. . .
White House spokesman Amy Brenda said.
Detroit was once synonymous with the United States. S.
During World War II, its auto giant turned production to aircraft, tanks and ammunition, giving the city the nickname \"democratic arsenal.
Now the name of the city has become synonymous with decline, decline and crime.
Detroit\'s population has fallen from its peak to 700,000.
There were 8 million people in 1950.
The city government has been plagued by corruption cases for many years.
Reduced investment in street lights and emergency services makes it difficult to regulate streets.
The murder rate in the city reached its highest level in nearly 40 years;
In the first quarter of 2013, only a third ambulance was put into use;
In the letter, the governor noted that nearly 78,000 abandoned buildings in the city caused \"additional public safety problems and reduced the quality of life in the city \".
On June, Orr presented a proposal to creditors to provide them with a penny for one dollar.
His plans have been resisted by some creditors, most notably by Detroit\'s two pension funds representing workers in retirement cities.
The funds recently filed a lawsuit in state courts questioning the governor\'s ability to authorize Orr to file for bankruptcy.
Creditors are expected to pose serious challenges to bankruptcy applications filed in the United StatesS.
Bankruptcy Court in eastern Michigan.
Douglas Bernstein, a bankruptcy lawyer for Plunkett Cooney in Bloomfield Hills, a Detroit suburb, said he expected the case to continue --to-
Three years, and the cost will be high.
\"It could reach dozens. of-
Millions to hundreds. of-
Millions of dollars, \"he said.
Unlike corporate bankruptcy, Chapter 9 cases have been relatively small since the 1934 revision of the bankruptcy law to include municipalities.
This means that there is little precedent, and the number of creditors means that the road ahead is complicated.
\"This is a very complex landscape and municipal investors will be watching it very closely,\" said Robert Amadio, portfolio manager at Western assets, New York.
General Motors, the only major car manufacturer in the United States. S.
Detroit-based automakers said in a statement that the company was \"proud to call Detroit home and home. . . (this is)
We and others hope that this day will not come.
However, we believe today can also mark a clean start to the city.
Ford Motor Company, based in Dearborn, a Detroit suburb, said it was \"optimistic that government leaders will succeed in strengthening the community . \".
But Ed McNell, the chief negotiator for 33 Union unions representing most of the service workers in Detroit, said the bankruptcy application was to \"destroy the Union \".
\"I \'ve always said it\'s a power fight,\" McNeil said . \".
\"It\'s not about fixing the city\'s finances.
This is about the agenda of the governor and himself taking over the city of Detroit.
\"In the municipal bond market, yields on Detroit bonds and bonds hit a record high on Thursday,\" said Dominic von, managing analyst at Thomson Reuters\'s municipal market data company.
Taxable bonds were traded at $38 in June 15, 2035.
The output is 5 of 16%.
By contrast, the yield of $76 and $8.