Detroit

About Detroit

The City of Detroit filed for Chapter 9 bankruptcy on July 18, 2013, the largest municipal bankruptcy in US history with 18 billion in debt. Detroits population had fallen from 1.8 million in 1950 to 700,000. The city had 78,000 abandoned buildings. Basic services like street lighting and police response were severely degraded. Emergency Manager Kevyn Orr negotiated a grand bargain in which foundations, the Detroit Institute of Arts, and the state of Michigan contributed 816 million to protect the art collection from creditors. Pensioners took modest cuts. The bankruptcy was completed in December 2014 in just 17 months. Judge Steven Rhodes ruled that pensions could be cut in bankruptcy, contradicting the Michigan Constitution. The grand bargain model has been studied for other municipal bankruptcies.