Detroit Bankruptcy is Largest Chapter 9 Filing in U.S. History

by Sabrina I. Pacifici on July 18, 2013

Via FindLaw – “The city of Detroit’s recent bankruptcy filing made it the the largest U.S. city in history to seek Chapter 9 protection. The filing (attached below) came in the face of $18.5 billion in debt to creditors and unions. Detroit has seemingly tapped out its tax base, with no further ability to tax its population of 700,000, which is down 60% from its peak of 1.8 million in the 1950s. The Motor City’s bankruptcy filing lays the groundwork for a historic effort to bail out a major U.S. city. Kevyn Orr, a bankruptcy expert, was hired by the state as emergency manager. He made the filing Thursday in federal bankruptcy court.”

  • United States Courts – When Cities Go Bankrupt: “The City of Detroit has declared bankruptcy under Chapter 9 of the Bankruptcy Code. Chapter 9 provides for reorganization of municipalities, which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts. Chapter 9 filings are not common. From 1991-2012 there were 217 Chapter 9 bankruptcies filed nationwide, with 20 filed in FY 2012. The majority of the cases have been for utility districts and not sovereign government entities. This map shows total Chapter 9 bankruptcies by district from 1991 to 2012.”

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