In his 140-page ruling which gives the City of Detroit the "OK" to proceed with its bankruptcy, U.S. Bankruptcy Judge Steven Rhodes ruled that pensions are fair game under federal bankruptcy law, trumping state law.
The judge’s stamp of approval gives Kevyn Orr the power to cut billions of dollars in payments that are owed to city employees, retirees, investors and other creditors.
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 was appointed by Michigan Gov. Rick Snyder in March to oversee the city's finances. He has proposed slashing more than $9 billion of $11.5 billion in unsecured debt.
Detroit mess and more messes
In a June 2013 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.
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