Detroit Eligible for Bankruptcy

“A federal judge has ruled Detroit is eligible to file for the nation’s largest Chapter 9 bankruptcy to help dig out from under $18 billion in debt and that city pension payments can be cut to help make that happen,” the Detroit News reports.

More significantly, the judge “ruled that Detroit pensioners do not have any additional protections outside of normal contract rights to their benefits. He said the city could slash those benefits,” though he warned Emergency Manager Kevyn Orr it should be seen as an extreme measure.

New York Times: “Under the ruling, the vastly diminished city, once the nation’s fourth largest and the cradle of the American auto industry, will be allowed to search for a way to pay off some portion of its debts and to restore essential services to tolerable levels under court supervision.”