Detroit Files Bankruptcy

Detroit became the largest municipality to file bankruptcy when it filed its Chapter 9 bankruptcy. The size of the city's liabilities are reported to be from $18 billion to $20 billion. Ken Orr, a bankruptcy expert hired to lead Detroit out of bankruptcy, initially made an offer of 10 cents on the dollar to creditors and less than 10 cents on the dollar to pension plans before the bankruptcy filing. Currently, 38 cents of every city dollar goes toward debt repayment and that figure was expected to rise to 65 cents by 2017. Of course, plans for the new $650 million Red Wings arena are unchanged since the funds for the arena come from a special $12.8 million per year property tax, not Detroit general funds, and $2 million per year from the Detroit Development Authority.