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
- 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
Breach of Contract Explained: Types and Consequences
Breach of contract disputes are the most common type of business litigation. Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. Understanding when to file a breach of contract lawsuit and how long you have to sue for breach of contract is essential […]
Author: Brittany P. Tarabour
How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide
Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]
Author: Christopher D. Warren
Gross Lease vs. Net Lease: Understanding the Key Differences
Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]
Author: Robert L. Baker, Jr.
What to Do If You Are Impacted by a Retailer Bankruptcy Part 2
Over the past year, brick-and-mortar stores have closed their doors at a record pace. Fluctuating consumer preferences, the rise of online shopping platforms, and ongoing economic uncertainty continue to put pressure on the retail industry. When a retailer seeks bankruptcy protection, a myriad of other businesses are often impacted. Whether you are a supplier, customer, […]
Author: Brian D. Spector
The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business
Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]
Author: Dan Brecher
Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1
The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]
Author: Brian D. Spector
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.