Detroit bankruptcy filing may come as soon as Friday

[The Straight Story]

DETROIT -- The city of Detroit is in final preparations to file for federal bankruptcy as early as Friday morning, several sources told the Detroit Free Press on Thursday.

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.

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

http://www.usatoday.com/story/news/nation/2013/07/18/detroit-prepares-bankruptcy-filing-friday/2552819/

[AsahinaKimi]

1. I have a question...

What happens to the sports clubs in Detroit? The Tigers, Pistons and Lions? Are they affected by this as well? I would think they must be.

[last1standing]

4. I'm more worried about the priceless works of art in the DIA.

The sports teams will be fine as they're highly profitable businesses owned by billionaires. The artwork in the DIA was purchased by our tax dollars including a recent mileage passed by Oakland, Macomb and Wayne counties to help fund operations. Will this be sold off after we just paid to keep it?

I'm also more interested in what happens to the police and fire departments. What happens to the schools? What happens to all the city services that need to function in order for people to survive?

This is all very scary.

[AsahinaKimi]

5. Yes I can not imagine .. this has never happened before ..

How does a whole city go bankrupt? Will people move away and go else where? I can not imagine Detroit becoming a ghost town..ever. Who will bail them out? The federal government? Detroit was also known for the auto plants there, I thought they were doing well again? I don't really understand this at all.

[last1standing]

7. I live here and I don't know how Detroit recovers.

So many of us have tried for years to help bring life back to the city but there seem to be too many points of failure: corrupt politicians, racism at the state level, hatred of Democrats in the legislature, shrinking tax base, out of control sprawl, low education rates, minimal transportation, the list goes on and on.

I think the biggest problem is the ignorance and spitefulness on behalf of the republicans in the state congress. They either don't understand how bankruptcy in Detroit will harm the entire state or they don't care so long as they get to stick it to "those welfare stealing democrats."

[ConcernedCanuk]

9. Won't happen - almost happened over 30 years ago to New York City.

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http://www.nytimes.com/2002/12/05/nyregion/recalling-new-york-at-the-brink-of-bankruptcy.html
__________________________________________________________________________

How close was New York City to bankruptcy in 1975?

So close that the city's lawyers were in State Supreme Court filing a bankruptcy petition.

So close that police cars were mobilized to serve the papers on the banks.

So close that aides to Mayor Abraham D. Beame had written a statement announcing the default along with an emergency effort to save the city's dwindling cash for vital services like police and fire protection.

That close.
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Think "Too big to Fail"

Cities, like many people, borrow money right to the edge of their budget,

Some, both cities and people borrow beyond their budget/income to repay previous debts.

Smartest move I ever made was in 1981 - cut up all my credit cards.

A couple of times I wished I'd had some, but now - grateful for my decision.

I owe nothing - what I have, is paid for.

And gonna stay that way.

CC

[last1standing]

11. It's happened.

http://www.usatoday.com/story/news/nation/2013/07/18/detroit-prepares-bankruptcy-filing-friday/2552819/

[ConcernedCanuk]

12. Actually no it hasn't - they've just filed for it

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same as New York had.

from your own link:

The filing begins 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.
_______________________________________________________________________________

When New York filed, many creditors realized they would only get a tiny portion of what was owed, so many renegotiated loans to maintain payments.

A legal bankruptcy under Chapter 9 usually leaves the entity in better financial shape than before.

To be REALLY bankrupt - one would have almost have no cash or income, and creditors taking away your assets.

Even when I was poor, I managed to live within my means for over 30 years, borrowing nothing.

That makes me odd, most people have mortgages, car payments, credit cards maxed out and so on.

Even the wealthy play with their money, borrowing from Peter to pay Paul.

I suspect it will not change, with all the easy credit arrangements, most will continue to live beyond their incomes, and when the income decreases - the trouble starts.

Other cultures move over here and do quite well - saving their money to buy whatever - family units are stronger.

I had a Pakistani friend decades ago who got married, but still lived at home with his parents - not out of financial need, he had a good job. His parents wanted him to stay in their home so he could save enough money to buy his own home outright.

We can learn from others.

CC

[ananda]

6. It looks as though everything will go private.

Wow. And I expect this is the hardline rightwing plan for every city and state.

[last1standing]

8. Detroit: An Ayn Rand Wetdream.

I've been calling this state Michissippi for some time now. Our legislature won't be happy until we beaten Mississippi in the race to the bottom.

[Rex]

2. How does a city file for bankruptcy?

So Detroit is Detroit Inc? I mean, bad enough we have public buildings named after corporations now, but a whole city owned by management?

So when they say protection from unions, do they mean pensions that are owed would be null and void?

[OnlinePoker]

13. Stockton California is working their way through bankruptcy

Pensions and retiree health benefits there are being looked at as cost cutting measures. For all the complaints I've seen on DU about the post office being forced to pre-fund retiree health benefits, when I see something like this city bankruptcy, I think it makes sense. The post office is having a tough time even without these benefits being funded, but at least it will give their employees some peace of mind that the money won't just be cut off if the P.O. also goes bankrupt.

[Cal Carpenter]

3. But the emergency dictat..er..manager was supposed to save Detroit

from this, the most terrible fate of all!!11!!

[Rex]

10. Robber Baron is a better term.

Now they can sale Dermot for pennies on the dollar to their fellow Robber Barons! Brilliant!