Detroit Bankruptcy rumors have been swirling for months, and they will likely come true tomorrow as Detroit officials have made the final preparations to declare Detroit Bankrupt tomorrow. The City will look to see if they qualify for Chapter 9 bankruptcy protection. Detroit will need bankruptcy protection in order to avoid paying off most of the 18.5 Billion dollars in debt the city owes to a number of different sources.
Detroit’s bankruptcy claims serves as a plan-B for the city after recent attempts by Detroit politicians to compromise with the numerous unhappy creditors Detroit owes money to. Detroit politicians threatened that if creditors would not compromise with the city regarding loan payments, that Detroit would not hesitate to declare bankruptcy.
Earlier this week, Detroit’s two pension programs proactively sued Detroit, saying that Detroit’s bankruptcy would cost future and current Detroit retirees 9.2 billion dollars in expected benefits. A Detroit bankruptcy would result in services across the city being slashed in the city’s mandatory attempt to pay off as much of its debt as possible.
In combination with the declaration of bankruptcy, Detroit will spend the next months, if not years, making deals with numerous creditors, and investors involved with the city. Never before has a city as large as Detroit declared bankruptcy, and the fallout will set precedents for years to come.
It is not guaranteed that Detroit will file bankruptcy tomorrow, but all signs indicate that they have prepared the paperwork necessary to do so. Numerous groups have or will file injunctions against the city before tomorrow, but it may be too late to stop the city from filing the claim.
Detroit’s 700,000 citizens, and estimated 20 billion dollar value make this the biggest bankruptcy case of all time. Depending on how Detroit recovers from their upcoming bankruptcy, this event could influence the financial decisions of economically struggling cities across the globe.