Sponsored Links:
Detroit defaults on debt payments – The Motor City is on edge of declaring bankruptcy | Chocolate City: The Best African American Blog
Chocolate City: The Best African American BlogChocolate City: The Best African American Blog

Detroit defaults on debt payments – The Motor City is on edge of declaring bankruptcy

0saves

Detroit defaults on debt payments - The Motor City is on edge of declaring bankruptcy
Detroit defaults on debt payments – The Motor City is on edge of declaring bankruptcy
Kevyn Orr told reporters there is a "50-50" chance that Detroit will declare bankruptcy and that a decision should happen in the next 30 days.

 

Orr, a lawyer and a bankruptcy expert was appointed in March by Michigan’s Governor Rick Snyder as the City of Detroit's emergency manager.

 

 

Orr’s assignment was to take over the city's finances and turn around what was described as a "crisis" situation.

Why is Detroit in such financial mess?

"Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin," explains Orr.

If Detroit does declare bankruptcy, it will become the country's largest city to do so. Meanwhile, the city has imposed a moratorium, or suspension, on some debt payments effective Friday to preserve the cash needed for essential services. Orr has also submitted a restructuring plan to holders of some $19bn in IOUs.

In his restructuring proposal, Orr is asking holders of $2.5 billion worth of the city's bond debt to accept less than 10 cents on the dollar.

Detroit mess and more messes

In his report, Orr noted that Detroit’s conditions would worsen if a deal on the debt cannot be reached.

Fewer than half of Detroit's ambulances were functioning at any time during the first quarter of this year, fire department vehicles are in bad shape and the city's income tax systems are in "catastrophic" state.

About 40 percent of street lights do not function, and the police department is "dysfunctional" – strained by cutbacks and having gone through five different chiefs in five years.

It said that due to police cutbacks Detroit's crime rate became the worst among large US cities in 2012, five times the national average.

The report said the city has 78,000 abandoned and blighted buildings, "nearly half of which are considered dangerous."

Detroit population plunged by more than half, from 1.8 million people in 1950 to 685,000 today, as crime, flight to the suburbs and the hollowing out of the car industry ate away at its foundations. Detroit was once the fourth largest city in the US.

JOIN THE CONVERSATION

Join the conversation! What do you think about this story?  At the bottom of the page, Chocolate City is using Facebook comments on stories. To post a comment, log into Facebook and then add your comment. Please like us on FACEBOOK and follow us on TWITTER.

If you enjoyed this post, please consider subscribing to the RSS feed to have future articles delivered to your feed reader.

ChocolateCity.cc Facebook Comments:


Visit Us On FacebookVisit Us On TwitterVisit Us On Google Plus