Detroit exits bankruptcy following financial rescue plan

12 Dec 14
The US city of Detroit formally exited bankruptcy this week, with state and city leaders hailing the restructuring process that had placed it on a solid financial foundation.

By Vivienne Russell | 12 December 2014

The US city of Detroit formally exited bankruptcy this week, with state and city leaders hailing the restructuring process that had placed it on a solid financial foundation.

Michigan governor Rick Snyder placed Detroit in bankruptcy in July last year because it could no longer provide adequate services to its residents or meet its obligations to creditors. It was running a $300m deficit and faced debts of $14bn.

The previous March, an emergency financial manager – lawyer Kevyn Orr – was appointed to lead the restructuring process.

Snyder made the announcement that Detroit was no longer bankrupt on December 10 and that Orr had relinquished his duties.

‘This was difficult work that required bold leadership and sacrifices from many people, and there is more to do,’ Snyder said.

‘But we also have watched through this process the people of our state draw closer and stand together in support of Detroit, recognising that all of Michigan is better when the city thrives.’

Detroit mayor Mike Duggan added: ‘Over the past year we have built a strong management team that is beginning to deliver better city services in a number of areas. With bankruptcy behind us, our administration’s full energy can remain on making city government work for all Detroiters.’

Following the restructuring, quality of life in the city is improving, the state said. Response times for police and emergency medical services are faster and work is underway to improve street lighting and waste collection.

The city is also on a more sustainable financial foundation, and has a two-year budget in place and plans for investment in services and infrastructure.

In his letter to Snyder and city treasurer Kevin Clinton confirming that he was relinquishing his duties, Orr said: ‘If the city takes advantage of this unique opportunity to shed the problems of the past and stays on the path that has been blazed in the restructuring, Detroit is poised to grow and thrive for the benefit of its residents and this state for many years to come.’

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