Detroit becomes largest US city to file for bankruptcy
DETROIT (KABC) -- Detroit has become the largest city in U.S. history to file for bankruptcy, as the state-appointed emergency manager filed for Chapter 9 protection Thursday.
There are a number of factors that have been blamed on Detroit's tumble toward insolvency, including steep population and tax-base falls. Detroit lost a quarter-million residents between 2000 and 2010. In the 1950s, the city's population reached 1.8 million, but today, it is struggling to stay above 700,000.
"The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services," Gov. Rick Snyder said in a letter attached to the bankruptcy filing. "The city's creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations."
Detroit's budget deficit is believed to be more than $380 million. Kevyn Orr, a bankruptcy expert who was hired by the state in March, has said long-term debt was more than $14 billion and could be between $17 billion and $20 billion.
In recent months, the city has relied on state-backed bond money to meet payroll for its approximately 10,000 employees.
If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment.
The Associated Press contributed to this report.
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