Detroit Files for Chapter 9 Bankruptcy Protection
Michigan’s Governor Rick Snyder authorized the City of Detroit’s emergency manager Kevyn Orr to seek federal bankruptcy protection for the City. Orr filed for Chapter 9 bankruptcy protection after receiving authorization, according to the governor's office.
Michigan’s Governor Rick Snyder authorized the City of Detroit’s emergency manager Kevyn Orr to seek federal bankruptcy protection for the City. Detroit is currently saddled with $18 billion in debt and unfunded liabilities, according to the governor’s office, and 38 cents of every dollar the City has goes toward debt repayment and other obligations. The governor’s office said that by 2017, 65 cents of every City dollar will go toward repayment.
Orr filed for Chapter 9 bankruptcy protection on July 18 after receiving authorization from Snyder. Orr's restructuring plan calls for investing $1.25 billion over 10 years in core City services, for example police and fire services, trash pickup and street lighting.
On Friday, July 19, Ingham County, Mich., circuit court judge Rosemarie Aquilina declared that the bankruptcy filing violates Michigan's state constitution by authorizing an emergency manager to proceed under Chapter 9 bankruptcy and threaten employees' pension benefits. In response, Michigan's Attorney General Bill Schuette filed an appeal with the Michigan Court of Appeals, according to the Court's daily news summary.
One of the primary concerns for Detroit City employees, and retirees, is whether their pensions would remain intact if the bankruptcy filing proceeds. In a joint statement, the Metro Detroit AFL-CIO’s President Chris Michalakis and Michigan State AFL-CIO’s President Karla Swift disagreed with the filing.
“Every step of the way, the citizens of Detroit were told that they had to give up their right to democratic representation in order to avoid bankruptcy,” the statement read. “Now that this filing has come anyway, it is clear that either state control has failed or that Governor Snyder and his emergency manager appointee were not honest about their intentions in the first place. City workers have already made severe concession to keep the city afloat. It is time to put the needs of Detroit residents above the interests of out of town creditors.”
Regarding pensions in the immediate future, Orr said in an interview on Detroit Public Television the City has no plans to change the status quo for the rest of the year.
For more on Chapter 9 bankruptcy and what it means for municipal officials, non-profit organization State Budget Solutions has an explanation here.
Updated 7/19/2013, 4:44 pm.
More Operations

Fleet Replacement Decisions, Waste Fleet Technology and the GFX Deadline
Is your next vehicle the right fit, can your records settle a missed pickup dispute, and what could your fleet teach others at GFX 2027?
Read More →
Is Delaying Fleet Replacement Really Saving Money?
Could delaying replacement cost your fleet more than it saves? This week’s recap takes a closer look, plus an update on GFX 2027.
Read More →What Government Fleets Are Missing About Their True Costs
What are fleet budgets missing, and how can agencies use the data they already collect to make a stronger case for change?
Read More →
Rethinking Fleet Decisions From the Budget Office to the Shop
This October we looked back at how public fleets are reconsidering familiar processes and using what they learn to make better decisions.
Read More →
Who Owns the Message on a Refuse Truck?
Refuse trucks can carry public messages into neighborhoods, but keeping those messages current takes planning and clear responsibility.
Read More →
Who Deserves Fleet Recognition and What Could You Teach at GFX?
Who helped shape your fleet career, and what have you learned that could help someone else?
Read More →
What’s Haunting Public Sector Fleets?
Public sector fleet challenges rarely happen in isolation, and addressing one often means understanding how it connects to another.
Read More →
Is Keeping Older Fleet Vehicles Really Saving Money?
Is keeping vehicles longer saving money, and what happens when a diagnostic test points to the wrong fix?
Read More →
How Smart Fleet Strategy Can Help Local Government Agencies Do More with Less
Keeping a vehicle longer may ease this year’s budget, but what does it cost the next one? A closer look at fleet decisions can reveal opportunities to reduce spending while protecting essential services.
Read More →
Connect with Government Fleet on LinkedIn
From industry news and fleet management strategies to conversations with peers, Government Fleet's LinkedIn page offers public-sector fleet professionals another way to stay informed and connected.
Read More →

