Confirming what has been assumed for years, Detroit, Mich. this week became the largest American city to declare bankruptcy. Following a string of smaller municipalities across the U.S., Judge Steven Rhodes ruled Tuesday that the desolated, crime-ridden city qualified for a Chapter 9 filing.
With more than $18 billion in liabilities and a desperate employment market, Rhodes described bankruptcy as the best possible move for the once prosperous Motor City.
Calling it a “momentous day,” he confirmed the “city cannot pay its debts” while celebrating “an opportunity for a fresh start.”
Despite bailouts and a state-appointed emergency city manager, crippling debt and unfunded pensions have ensured that Detroit remains encumbered. To the chagrin of the city’s strong union influence, Rhodes said he would consider pension cuts as part of the bankruptcy process.
Moving forward, Detroit officials and lawyers will prepare a plan to deal with its mountainous debt. An initial proposal is expected within the month.
As with almost any bankruptcy filing, the decision has not pleased everyone. In addition to opponents from various unions, a number of the city’s creditors are also against the filing. Still, Rhodes seems convinced this is the best move for everyone involved.
The city will now begin selling assets, possibly including art and municipal utility service providers.
Though one of the criteria used in determining Chapter 9 qualification is a good faith negotiation with creditors, Rhodes ruled that such talks would be “impracticable.”
Since the city has more than 100,000 creditors, he said the process would have been far too time-consuming in response to increased pressure for decisive action.
Time will only tell if Motown will ever achieve a national stature on par with its heyday during the mid-1900s, but it has long been obvious that today’s Detroit could no longer survive under the weight of generational leftist leadership. It was obvious, that is, to everyone except Barack Obama.
Just over a year ago, a campaigning Obama declared his superiority over challenger Mitt Romney by asserting he “refused to let Detroit go bankrupt.” Apparently, Romney – a successful businessman who has saved countless companies in Detroit’s position – was right all along.
–B. Christopher Agee
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