HEADLINES : Michigan

Detroit's bankruptcy battle likely to be long and painful | by John Schoen | July 19, 2013

People have already fled Detroit in droves. Forty percent of its streetlamps don't work. Don't get sick there; you'll wait a long time for an ambulance. There's even talk about stripping the art from the walls of the city's museums to help pay off more than $18.5 billion in city debt.

Detroit's bankruptcy filing brings into sharp focus the decades-long decline of the once prosperous hub of American manufacturing. In its heyday, it was the nation's fourth largest city.

The case is being closely watched by retired city workers, residents and investors looking for a resolution to a long-running, downward financial spiral that has left the city buried in debt and sparked an ongoing exodus of residents looking for a fresh start.

City officials are also looking for a fresh start, but they could have a long wait. Detroit already faces a slew of lawsuits and is girding for an epic legal battle with creditors. The Thursday filing for the largest municipal bankruptcy in U.S. history came just minutes before a state court judge was to hear arguments on whether to grant an injunction to block the city from taking the extraordinary step.

"Bankruptcy gives us breathing room," Kevyn Orr, the city's emergency financial manager, told reporters Friday. "We were being sued on almost a weekly basis. I pleaded for that not to happen."

That breathing room got a lot tighter Friday when an Ingham County judge said the bankruptcy filing violates the Michigan Constitution and state law and must be withdrawn. Judge Rosemarie Aquilina ordered that Orr and Gov. Rick Snyder take no further actions to try to cut retiree benefits.



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