Detroit gets go-ahead for bankruptcy exit plan
DETROIT — A judge cleared Detroit to emerge from bankruptcy Friday, approving a hard-fought turnaround plan with a fervent plea to the people of this onetime industrial powerhouse to “move past your anger” and help fix the Motor City.
“What happened in Detroit must never happen again,” federal Judge Steven Rhodes said in bringing the case to a close a relatively speedy 16 months after Detroit, the cradle of the auto industry, became the biggest city in American history to file for bankruptcy.
The plan calls for cutting retiree pensions by 4.5 percent, erasing $7 billion of debt and spending $1.7 billion to demolish thousands of blighted buildings, make the city safer and improve long-neglected basic services.
Rhodes praised decisions that settled the most contentious issues in the bankruptcy case, including a deal to prevent the sell-off of world-class art at the Detroit Institute of Arts and a consensus that prevented pension cuts from getting even worse for thousands of retirees. He said the pension deal “borders on the miraculous,” though he acknowledged the reductions could cause severe misfortune for some.
Politicians and civic leaders, including Republican Gov. Rick Snyder, hailed the milestone as a fresh start for the city and the beginning of what could be a bright era. It was Snyder who agreed with state-appointed emergency manager Kevyn Orr to take the city into Chapter 9 bankruptcy protection.
Detroit was brought down by a combination of factors, including corruption and mismanagement in City Hall, a long decline in the auto industry and a flight to the suburbs that caused the population to plummet to 688,000 from 1.2 million in 1980. The exodus has turned entire neighborhoods into desolate, boarded-up landscapes.
With more square miles than Manhattan, Boston and San Francisco combined, Detroit lacked enough tax revenue to cover pensions, retiree health insurance and buckets of debt sold to keep the budget afloat.
“Detroit’s inability to provide adequate municipal services runs deep and has for years. It is inhumane and intolerable, and it must be fixed,” the judge said.
In signing off on the plan, Rhodes appealed to residents who expressed sorrow and disgust at the city’s woes.
“Move past your anger. Move past it and join in the work that is necessary to fix this city,” he said. “Help your city leaders do that. It is your city.”