City of Detroit Planning to Cut $7 Billion of its Debt in Bankruptcy
The City of Detroit is expecting to get rid of $7 billion of its debt in bankruptcy court by significantly reducing retiree pension and health care costs, according to a July 10 Detroit News article.
Detroit’s bankruptcy, the biggest municipal bankruptcy in American history, is also expected to carry a massive price tag from investment banking firm Miller Buckfire & Co. if the city emerges from the Chapter 9 bankruptcy in late October — some $28 million — that taxpayers will likely be responsible for funding, the Detroit News reports.
The city’s creditors will also take a huge financial hit if the city’s bankruptcy is successful.
“If the city’s bankruptcy case is dismissed … its creditors will not be insulated from the city’s financial chaos and ruin,” city adviser Kenneth Buckfire of Miller Buckfire & Co. and wrote in a statement.
According to USA Today, Detroit’s bankruptcy, while placing a financial burden on its taxpayers and creditors, will also allow the city to begin working on revitalizing itself. The bankruptcy will free up about $1.4 billion for Detroit to invest in public city services such as public protection and blight removal.
Ultimately, it’s still a three-month wait to see if Detroit’s bankruptcy is successful — or if it isn’t.
