On Thursday, Detroit became the largest city in U.S. history to file for bankruptcy.
Kevin Orr, whom Michigan Gov. Rick Snyder (R) appointed in March to become Detroit’s emergency manager,filed for Chapter 9 protection in federal bankruptcy court after he was unable to convince creditors “to take pennies on the dollar to help facilitate the city’s massive financial restructuring.”
In a letter that was attached to Detroit’s bankruptcy filing, Snyder wrote there was only “one feasible path offers a way out” for Detroit and that “the citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services.”
“Despite Mr. Orr’s best efforts, he has been unable to reach a restructuring plan with the city’s creditors,” Snyder wrote. “I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection.”
According to the Associated Press, “Detroit’s budget deficit is believed to be more than $380 million,” and “Orr has said long-term debt was more than $14 billion and could be between $17 billion and $20 billion.” The city’s assets could be liquidated if the bankruptcy filing is approved to satisfy creditors.
“The city’s creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep,” Snyder wrote. “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.”