When anyone – including a great city like Detroit – “successfully” emerges from bankruptcy, no one is usually happy how it turned out. This is clearly the case with the city of Detroit’s Chapter 9 municipal bankruptcy, following Judge Steven W. Rhodes’ approval of the reorganization plan on November 7, 2014.
When Detroit sought bankruptcy protection in July 2013, it was up to its eyeballs in debt and other unfunded financial obligations. The run-up to the Motor City’s bankruptcy unfolded over decades, but can be boiled down to this simple formula: not enough money coming in and too much money going out. At jeopardy, among other essential city services like, say, police and fire protection, were the pension plans of the municipality’s retired and current employees, as well as the fate of the significant art collection held by the Detroit Institute of Arts (the “DIA”), whose works could arguably be sold and the funds applied to the city’s debt obligations. Continue reading