The city of Detroit filed for Chapter 9 bankruptcy on Thursday afternoon.
Detroit’s emergency manager, Kevyn Orr, filed the request to begin what will be the biggest municipal bankruptcy in United States history. Chapter 9 status would shield the municipality from some $18.5 billion in debt and other liabilities.
The decision to file for bankruptcy required the approval of both Orr and Michigan Gov. Rick Snyder (R). Orr was appointed by Snyder to try and salvage the city’s finances, which reached a crisis point amid a steady decline in population and tax receipts.
“This was a difficult decision but I believed there were no other options,” Snyder said Thursday.
Snyder added that the situation had been forming for 60 years.
“From a financial point of view, let me be blunt: Detroit’s broke. It’s been spending 38 cents on the dollar towards legacy costs. That number was projected to grow to 65 cents on the dollar. That’s not a sustainable situation.”
More important, Snyder added, is “poor services” being delivered to the citizens of Detroit.
“If you look at it in terms of public safety, Detroit has been on the top ten list of the most violent cities in 24 of the last 27 years,” Snyder said.