We don’t typically write about large organization bankruptcies. Our focus is on serving the needs of individual consumers in Tennessee who too often find themselves overwhelmed by debt and desperately seeking relief. For many the protections of bankruptcy are the best way to stop threats of foreclosure, repossession and garnished wages.
But something happened today that is historic in the context of bankruptcy and so we feel it warrants some attention here. Perhaps it may serve to reinforce for readers that it is possible to navigate a safe course through bankruptcy, no matter how challenging the difficulties may be.
The event we are talking about is a federal judge’s approval of plans to allow the city of Detroit to exit bankruptcy. The move means the Motor City is clear now to being the process of repairing its economic engine so it can leave its financial burdens behind.
The city’s plan calls for the shedding of just under half of its $18 billion worth of debt. At the same time, it anticipates the spending of about $1.7 billion to revitalize services that have been neglected. The judge calls it a fair and feasible plan and one that is in the best interest of the city’s creditors.
The decision comes less than 16 months after Detroit submitted its filing for consideration. The move made it the largest city in the United States to ever take the action. Many observers had predicted that the process would take much longer than it did and generate more dissension than it has, the main reasons being the depth of the problem and size of the city.
Many credit the speed of action on months of private negotiations with major creditors. Those included various lenders and organizations representing the city’s retired workers.
To be sure, the Chapter 9 filing Detroit used is not the same as the Chapter 7 or Chapter 13 filings used by private individuals. But it does show that working with experienced bankruptcy counsel can be beneficial in even the most complex of situations.
Source: The New York Times, “Judge Approves Detroit’s Plan to Exit Bankruptcy,” Monica Davey and Mary Williams Walsh, Nov. 7, 2014