Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Detroit Files for Chapter 9 Municipal Bankruptcy
Author: Joel R. Glucksman
Date: July 23, 2013
Key Contacts
Back
After months of closed-door negotiations and speculation, the city of Detroit officially filed for Chapter 9 municipal bankruptcy, making it the largest municipal bankruptcy in U.S. history.
The city, which is facing billions of dollars in debt due to decades of mismanagement, high unemployment, and tax revenue losses, failed to reach an accord over the recent proposals put forth by Detroit’s appointed emergency manager Kevyn Orr. Orr had warned that if creditors and lawmakers could not reach an agreement, there would be no alternative other than to seek bankruptcy law protection.
Now that the city has officially filed proceedings, the 30-to-90-day period will commence during which time the court will determine the city’s eligibility for Chapter 9 bankruptcy and provide guidance on how many creditors may compete for the city’s limited resources. Currently, Detroit is carrying $18.5 billion in debt and liabilities.
After signing off on the filing with the U.S. Bankruptcy Court in the Eastern District of Michigan, Gov. Rick Snyder expressed his disappointment in the path the city has been forced to take, but noted that it was the only remaining course of action.
“The fiscal realities confronting Detroit have been ignored for too long,” said Snyder. “I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future. This is a difficult step, but the only viable option to address a problem that has been six decades in the making.”
The proceedings are expected to be long and costly, and analysts project that creditors will face huge losses due to the city’s depleted resources. In addition to the more than 100,000 creditors seeking recompense from the city that was once the cradle of the U.S. auto industry, retiree and health benefits for thousands of unionized city workers are also in jeopardy.
Detroit’s Bankruptcy has also brought to light some very interesting scenarios to help pay back creditors. Click the following link to read my follow up piece, “PSST! Hey Buddy. Wanna Buy a Picasso?”
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Guardianships in New Jersey: When a Loved One Can No Longer Manage Personal or Financial Affairs
When a family member can no longer make important decisions for themself, the question is often not whether the family will step in, but whether they have the legal authority to do so. A spouse may manage household finances, or an adult child may arrange medical care and pay bills. Still, informal assistance does not […]
Author: Marc J. Comer
New Jersey’s Revised UHAC Regulations: What Residential Developers Need to Know About Affordable Housing Commitments
New Jersey residential developers with affordable housing obligations should carefully review their existing approvals, development agreements, and proposed deed restrictions in light of the State’s revised UHAC regulations (Uniform Housing Affordability Controls). The regulations, which took effect on November 6, 2025, significantly change the administration and physical requirements for affordable housing units. For developers with […]
Author: Wendy Rubinstein Quiroga
“No Comment” Culture: Why Silence Is Often the Riskiest Legal Strategy
A “no comment” response is sometimes the right call when a legal problem arises. As a blanket policy, however, it lets allegations go unanswered, deadlines pass, evidence disappear, and manageable disputes grow into expensive litigation. The businesses that fare best are usually the ones that say little publicly while acting decisively behind the scenes. When […]
Author: Sean M. Pena
Utility-Scale Battery Storage Projects: A Legal Roadmap for Developers, Property Owners and Other Stakeholders
Utility-scale battery energy storage systems (BESS) are becoming an increasingly important component of the electric grid throughout New Jersey, New York, and Pennsylvania. As renewable generation expands, electricity demand increases and grid operators seek greater flexibility, battery storage can help balance supply and demand while providing additional capacity and reliability. For developers, battery storage presents […]
Author: Nicholas Wall
Navigating Disputes: Hire a Partnership Dispute Lawyer
A falling out between partners can be disastrous for any business. In many cases, the partnership will not survive. If you are in an unworkable situation with your partners, it may be time to consult a partnership dispute lawyer experienced in handling partnership breakups and dissolutions before the situation deteriorates any further. It is easy […]
Author: Jay McDaniel
Section 363 Sales in Bankruptcy: What Businesses, Lenders, and Buyers Need to Know
When a company enters Chapter 11 bankruptcy, many assume the process will culminate in a lengthy reorganization plan. However, distressed businesses are increasingly being sold through a different mechanism — a sale under Section 363 of the United States Bankruptcy Code. A Section 363 sale allows a company, as a debtor-in-possession in bankruptcy, to sell […]
Author: John D. Giampolo
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.