Introduction
Last year, dated July 18, 2013, the government of Detroit, Michigan filed a Chapter 9 Bankruptcy with debt amounting to more or less $20 Billion. It was noted in the history of the United States as the largest municipal bankruptcy after Alabama’s $4 Billion debt in 2011. It was also Detroit that municipality has filed Chapter 9 bankruptcy which has been noted to have the largest population after beating the records of Stockton, California way back 2011. (Davey and Walsh, 2013)
After the filling of bankruptcy is the taking over of Kevyn Orr after the declaration of financial emergency in the first quarter of 2013. He was then appointed to be an emergency manager, but everything fails, and all plans to cut down the debt have been unsuccessful.
On the second quarter of the year, the thirtieth Judicial Circuit Court of Michigan through Judge Rosemarie Aquilina started the series of hearings until December 2013. It was when the court finally declared Detroit’s eligibility for Chapter 9 Bankruptcy having $18.5 Billion debt. The recent and continuing actions are noted to be done last June 2014 after the legislative of Detroit started filling bills to help their country get out of bankruptcy stage.
Factors Leading to Detroit’s Filling of Bankruptcy
Aside from the $18-20 Billion debt of Detroit, there are still other factors that have led to the filing of a bankruptcy by the legislatives. John Reeves, a British columnist, listed the following factors in 2013 which lead to the filing of bankruptcy.
First is the fall of inflation-adjusted dollars of 40% from the year 1962 to 2012. The second factor is because they only have approximately 9,700 workers. However, there are 21,000 who are retired and still receiving pensions. Also, the workforce is also affected by a decrease in population and the tripled unemployment rate in June 2012. Tax revenues were also lessened by more or less 20%. There are also significant amounts of debt in both healthcare and pension liabilities. Detroit has also been a fire prone city since there are almost 11,000 to 12,000 fire cases estimated per year. The city also has 78,000 idle and abandoned structures and half of the parks were closed since 2008. These factors have greatly influenced the filing of Chapter 9 bankruptcy of Detroit, Michigan.
The Current State of Detroit
The bankrupt state of Detroit has not yet come to an end up to this point in time. Right after the filing of Chapter 9, the city made a plan for debt adjustments through the temporary ruling of Kevyn Orr. Judge Rodhes, the judge who currently handles the case, moderated the trial last August 2014 on whether or not the city should be confirmed.
On October 16, 2014, group of lawyers for the city and Financial Guaranty Insurance Company then disclosed the deal that settles the company’s claims. This means that both the city and the state would pay the FGIC for the demolition and also, the distribution of other assets shall be done for redevelopment.
Detroit in improving the current economic condition
The solutions proposed for improving the current economic edition are to lessen and totally eliminate the corruption in a city and to strengthen the implementation of policies most especially those which are related to tax, labor or employment and consumer’s welfare. These solutions may be too mainstream but these are the simplest things that the city of Detroit can do to resolve their issue on bankruptcy. Other mainstream resolutions are the manifesto and campaign advocacy signing and of course, the lobbying and campaigning for transparency and accountability of the city.
In addition to that, there are still a lot to look forward to as the legislative try to counter all the negative impacts brought about by their financial difficulties. One is giving more power over city operators, and others include the adjustment of pension cuts as well as the end of the contract of contractual farmers.
Conclusion
It is evident how Detroit, Michigan is having real trouble in answering their problem in bankruptcy. However, it is commendable how the legislative and other temporary officers still do their best in everything they do just to be able to save a dying city. After a year, it is admirable how they still chose to stay and continue thinking of how they could resolve the problem.
Detroit is one of America’s greatest cities, and it is painful to see and to hear news that it is horribly dying in this moment. Before everything has happened, it was once a jam-packed metropolis which serves as a home for almost 1.8 million citizens. It also once had the highest per capita income in the United States and now, Detroit has been dying due to debts and had less manpower than it used to have.
It is true that the city has been broke for a year. Months had passed, but minimal change and progress was observable. These changes are so minimal to the point that the citizens fail to recognize the progress. Resolving the issue on bankruptcy, as seen in the case of Detroit, therefore can be concluded as a hard issue to be resolved. Even one of the greatest cities of the United States of American has failed to counter.
References
Alhajal, Khalil. 5 key facts and a timeline on Detroit's bankruptcy. MLive Media Group. Retrieved December 4, 2013. Accessed October 31, 2014.
Davey, Monica and Walsh, Mary Williams (2013). "Billions in Debt, Detroit Tumbles Into Insolvency". The New York Times. Retrieved July 19, 2013. Accessed October 31, 2014
Reeves, John. 2013. 19 Shocking Facts About Detroit's Bankruptcy. The Motley Fool. Retrieved December 3, 2013. Accessed October 31, 2014
