- Joined
- Apr 7, 2013
- Messages
- 27,174
CNN.com
NEW YORK (CNNMoney)
Detroit filed for bankruptcy Thursday afternoon, becoming the nation's largest public sector bankruptcy. The move could slash pension benefits to city workers and retirees, and leave bond holders with only pennies on the dollar.
The bankruptcy was filed by Emergency Manager Kevyn Orr and approved by Michigan Gov. Rick Snyder. Snyder said the financial condition of the city left him no choice, and that Detroit could not meet its obligation to either its citizens or its creditors.
"The only feasible path to ensuring the city will be able to meet obligations in the future is to have a successful restructuring via the bankruptcy process," Michigan Gov. Rick Snyder said in the letter authorizing the filing.
But public employee unions are sure to fight the move.
Orr already halted payments on about $2 billion in debt last month, saying the city needed to preserve its dwindling supply of cash. The city faces total liabilities of about $18 billion. Orr's reorganization plan calls for cutting $11.5 billion in debt down to $2 billion. That would mean that investors and retirees would receive an average of just 17% of what they are owed. Specific plans for the cuts are unknown at this time.
Click here for full article
-----------------------------------------------------------------------------
I had no idea cities could file for bankruptcy.
NEW YORK (CNNMoney)
Detroit filed for bankruptcy Thursday afternoon, becoming the nation's largest public sector bankruptcy. The move could slash pension benefits to city workers and retirees, and leave bond holders with only pennies on the dollar.
The bankruptcy was filed by Emergency Manager Kevyn Orr and approved by Michigan Gov. Rick Snyder. Snyder said the financial condition of the city left him no choice, and that Detroit could not meet its obligation to either its citizens or its creditors.
"The only feasible path to ensuring the city will be able to meet obligations in the future is to have a successful restructuring via the bankruptcy process," Michigan Gov. Rick Snyder said in the letter authorizing the filing.
But public employee unions are sure to fight the move.
Orr already halted payments on about $2 billion in debt last month, saying the city needed to preserve its dwindling supply of cash. The city faces total liabilities of about $18 billion. Orr's reorganization plan calls for cutting $11.5 billion in debt down to $2 billion. That would mean that investors and retirees would receive an average of just 17% of what they are owed. Specific plans for the cuts are unknown at this time.
Click here for full article
-----------------------------------------------------------------------------
I had no idea cities could file for bankruptcy.
