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By Matthew Dolan
Reuters A view of downtown Detroit is looking north along Woodward Ave. DETROIT (MarketWatch) — The city of Detroit filed for federal bankruptcy protection on Thursday afternoon, making the automobile capital and one-time music powerhouse the country’s largest-ever municipal bankruptcy case.
• Breaking-news alerts: Get free email alerts the instant news breaks /conga/story/misc/alerts_sixwide.html 239164 The case filed in U.S. District Court for the Eastern District of Michigan came after Kevyn Orr, the emergency manager, failed to reach agreements with enough of the bondholders, pension funds and other creditors to restructure Detroit’s debt outside of court. The final decision rested with Republican Gov. Rick Snyder, who had appointed Orr as Detroit’s overseer in March.
CITIES IN THE NEWS • 10 markets with most vacant homes • 13 cities where fans are ignoring pro teams • Detroit files for bankruptcy protection /conga/story/misc/cities.html 271775 It was expected that the city would report long-term liabilities close to $20 billion. The city’s assets were less clear, but Orr had called the city functionally insolvent and recently missed a payment to the city’s pension system of nearly $40 million.
The financial outlook has never been bleaker for the Motor City, which has shrunk from its peak of nearly two million people in 1950 to 700,000 today.
Hurt by a flight of residents and businesses to the suburbs, cuts in state aid and a crash in real-estate values, Detroit borrowed to meet operating costs as well as long-term liabilities such as pensions and health care for retired city workers.
An expanded version of this report appears at WSJ.com.
