Detroit files for bankruptcy as public services are near collapsing

30 July 2013 - Which Way To Pay

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Billions in debt, Detroit becomes the largest US city to file for bankruptcy

Detroit, once the very symbol of US industrial power, has faced decades of problems linked to declining industry. Public services are nearing collapse, 70,000 properties lie abandoned and now it is in search of protection from creditors who include public-sector workers and their pension funds.

The bankruptcy filing has been feared for months

Last week, Detroit became the largest U.S. city to file for bankruptcy. The filing, which has been feared for many months, could mean cutting jobs, selling assets and scaling back basis services such as trash collection and snow ploughing. The filing begins a 30 – 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.

In a letter approving the move, Gov. Rick Snyder said “only one feasible path offers a way out”. "The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services," Snyder wrote. "The city's creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations."

The White House is monitoring developments regarding bankruptcy

Meanwhile the White House said it was closely monitoring developments in Detroit "While leaders on the ground in Michigan and the city's creditors understand that they must find a solution to Detroit's serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalise and maintain its status as one of America's great cities," said White House spokeswoman Amy Brundage.

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