Detroit filed the largest-ever municipal bankruptcy in U.S. history on Thursday, marking a new low a city that is the cradle of the U.S. auto industry and set a costly court battle with creditors phase.
If approved by a federal judge, bankruptcy, Detroit will force thousands of creditors to negotiate with the city's emergency management solutions Kevyn Orr estimated $ 1.85 billion in debt and weaken Michigan's largest city.
Thousands of city workers pension and retiree medical benefits in the future hangs in the balance.
Foreseen for the record, investors drove Detroit bonds and notes at a lower price, send their yields hit record highs on Thursday.
In a letter accompanying the record, Michigan Gov. Rick Snyder says he has approved a requirements document from Albany Chapter 9 bankruptcy protection and that "Detroit altogether can not raise enough revenue to meet its current obligations, and that is only expected to get worse situation absent filed for bankruptcy protection. "
Speaking of Channel 4 in Detroit after the announcement, Snyder, the Republican said, "Let us stop the decline, let us stabilize, let us in the right direction things work."
Snyder called Orr in March, to solve the city's long-term debt is estimated to be spiraling $ 18.5 billion, that is.
A White House spokesman said the U.S. Democratic President Barack Obama and his senior team to closely monitor the situation in Detroit.
"While on the ground in Michigan and the city's creditors leaders understand that they must find a solution to Detroit's serious financial challenges, we remain committed to continuing our strong partnership, Detroit ..." White House spokesman Amy Brundage said.
Detroit was once synonymous with American manufacturing strength. Auto giants switch production aircraft, tanks and ammunition during World War II, won the city's "arsenal of democracy nickname."
Now, the city's name has become decline, decay and crime synonymous. Detroit has seen its population from the 1950 peak of 1.8 million down to 700,000. The city government corruption cases plagued for years. Has left it struggling to police the street lights and emergency service investment loss.
The city's highest murder rates in the last 40 years, only a third is an ambulance service in the first quarter of 2013, and its nearly 78,000 abandoned building to create "additional public safety issues and reduce the quality of life in the city the governor said: "In his letter.
In June this year, Orr submitted a proposal to the creditors to provide their pennies on the dollar. His plan has been met with resistance, some of the creditors, most notably Detroit's two pension funds, a retired city workers. The fund recently filed a lawsuit in state court, challenging the governor's authority Orr filed for bankruptcy capabilities.
Long road ahead
Creditors are expected to install a challenge, which is in the United States Bankruptcy Court for the Eastern District of Michigan submitted to bankruptcy.
Bankruptcy lawyer Douglas Bernstein, in Detroit suburb Bloomfield De Xier Spencer Ji Kuni, said he expected the situation will last for one to three years, it will be very expensive.
"It could run to tens, hundreds of millions of dollars to millions of dollars," he said.
Unlike business failures, there have been relatively few Chapter 9, "Bankruptcy Law", because in 1934, was revised, including municipalities. This means that almost without precedent, the number of creditors implies a complex road ahead.
Amoxicillin Jagdeo, "said Robert, a portfolio manager at New York Western Asset:" This is a very complex landscape, it is a very close observation to be invested by the municipal government.
Major U.S. automobile manufacturers, is headquartered in Detroit, GM said in a statement that the company "is proud to call Detroit home and ... (This is) one day, we and others hope it will not come, but We believe that today also marks a clean city can begin. "
, Which is based in the Detroit suburb of Dearborn, Ford Motor Company, said it was "optimistic that government leaders will succeed in strengthening community."
But Ed McNeil, 33 Detroit service workers union representatives coalition chief negotiator said that filing for bankruptcy protection is a "union buster."
"I've always said all along, this is a power grab," McNeil said. "This is not fixed the city's finances, which is the governor and his own agenda to take over the city of Detroit."
In the municipal bond market, the Detroit record in Thursday trading high-yield bonds and notes, management analyst Dominique Vonella, in the municipal market data, Thomson Reuters unit.
Taxable June 15, 2035 $ 38.5 bond trading and yield 16%. This compares with $ 76 and a yield of 8.39 percent, in mid-May.
 



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