The city of Detroit could be heading for bankruptcy, a sad turn of events in its struggle to gain financial footing, as the city has been gripped by record unemployment and foreclosure rates:
Detroit News: Even as the state Treasury prepares to begin another financial review of Detroit’s books, a plan is being solidified in the governor’s office that would guide Michigan’s largest city through what is being called a managed bankruptcy.
The working concept, still evolving, assumes that the state’s financial review would find severe financial distress in Detroit, that Mayor Dave Bing and City Council would be unable to push through overdue restructuring, and that the process would culminate in appointment of an emergency financial manager under Public Act 72.
The case would be filed under Chapter 9 of the federal bankruptcy code, according to two ranking sources familiar with the situation, following efforts to reach prenegotiated settlements with as many key creditors — unions, vendors and pension funds among them — as possible before any filing.
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