Bankrupt Cities, Municipalities List and Map Bankrupt Cities, Municipalities List and Map Many local governments across the U.S. face steep budget deficits as they struggle to pay off debts accumulated over a number of years. As a last resort, a select few filed for bankruptcy. Governing is tracking the issue, and will update this page as more municipalities seek bankruptcy protection. A federal judge recently approved Detroit's plan to pay off about $7 billion in debt. Detroit previously became the largest U.S. city ever to file for bankruptcy in 2013. Overall bankrupt municipalities remain extremely rare. A Governing analysis estimated only one of every 1,668 eligible general-purpose local governments (0.06 percent) filed for bankruptcy protection from 2008 through 2012. Excluding filings later dismissed, only one of every 2,710 eligible localities (not all states permit governments to file for bankruptcy) filed since 2008. The majority of filings have not been submitted by bankrupt cities, but rather lesser-known utility authorities and other narrowly-defined special districts throughout the country.

In Omaha, Neb., more than a dozen sanitary districts have filed for bankruptcy, accounting for nearly a quarter of all Chapter 9 filings since 2010. It's also important to note that only about half of states outline laws authorizing municipal bankruptcy. View our bankruptcy laws map for each state's policies. List of Bankruptcy Filings Since January 1, 2010 All Municipal Bankruptcy Filings: 51 General-Purpose Local Government Bankruptcy Filings (9): -- City of Hillview, Ky. -- City of San Bernardino, Calif. -- Town of Mammoth Lakes, Calf. (Dismissed) -- City of Stockton, Calif. -- City of Harrisburg, Pa. (Dismissed) -- City of Central Falls, R.I. -- Boise County, Idaho (Dismissed) LAST UPDATED: Aug. 21, 2015 Municipal Bankruptcies Map The map below shows all municipalities filing for Chapter 9 bankruptcy protection since 2010, along with local governments voting to approve a bankruptcy filing. Cities, towns and counties are shown in red. Utility authorities and other municipalities are displayed in gray. Click a marker to view details of each filing.

Multiple municipalities have filed for bankruptcy in some cities, such as Omaha, Neb., so not all markers are visible without zooming in on the map. Please note that some listed municipal bankruptcy filings have been dismissed, as indicated. Detroit Bankruptcy States without laws authorizing municipal bankruptcies often allow for different measures providing financial relief. In Michigan, seven cities and school districts have emergency managers, and another three are under consent agreements. View our map and story about the state's efforts to turn around the distressed municipalities. Other Detroit Coverage: Detroit becomes largest US city to file for bankruptcy - NBC News Jul 18 2013, 6:05 pm ET Detroit becomes largest US city to file for bankruptcy by CNBC and wires advertisement In this July 12, 2013, an Outsource to Detroit banner from Galaxe.Solutions is seen on a Detroit building. Carlos Osorio Detroit, saddled with more than $18 billion in debt, became the biggest U.S. city in history to file for bankruptcy on Thursday. Once a symbol of America's industrial might and more recently an example of urban decay, crime and hopelessness, the home to the nation's automobile industry took the extraordinary step after months of negotiations with creditors failed.

“The fiscal realities confronting Detroit have been ignored for too long. I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future,” Gov. Rick Snyder said in a statement. “This is a difficult step, but the only viable option to address a problem that has been six decades in the making.” Snyder authorized the city's emergency manager to file for federal bankruptcy, as required by state law, saying it was the only option to restore the city and provide residents with necessary public services. Kevin Orr, a bankruptcy expert, was hired by the state in March to lead Detroit out of a fiscal free-fall and made the filing in federal bankruptcy court. Orr was unable to convince a host of creditors -- including pensions, Teamsters, employee associations and banks -- to take pennies on the dollar to help facilitate the city's massive financial restructuring. He laid out his plans in June meetings with debt holders, in which his team warned there was a 50-50 chance of a bankruptcy filing. A number of factors — most notably steep population and tax base falls — have been blamed on Detroit's tumble toward insolvency.

Detroit lost a quarter-million residents between 2000 and 2010. A population that in the 1950s reached 1.8 million is now struggling to stay above 700,000. Much of the middle-class and scores of businesses also have fled Detroit, taking their tax dollars with them. In a letter that accompanied the federal filing, Snyder listed the city's ailments: The city's unemployment rate has tripled since 2000; its homicide rate is at its highest in nearly 40 years; residents wait an average of 58 minutes for the police to respond to their calls (the national average is 11 minutes). The governor's statement on Thursday said that 38 cents of every city dollar goes toward debt repayment, legacy costs and other obligations. That was expected to reach 65 cents per dollar by 2017. When Orr initially made his pitch to creditors, some were asked to take about 10 cents on the dollar of what the city owed them. Underfunded pension claims would have received less than the 10 cents on the dollar under that plan.

A team of financial experts put together by Orr said that proposal was Detroit's one shot to permanently fix its fiscal problems. On Wednesday, as the bankruptcy filing was imminent, Detroit's two pension funds filed a lawsuit against the governor and Orr, the Free Press, Detroit's hometown paper, reported . Detroit city employees filed suits earlier this month as well -- for fear their pensions would be slashed if the city filed for bankruptcy. Earlier Thursday, the Free Press said the filing would set off a 30- to 90-day period "that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer." If the bankruptcy filing is approved, city assets could be liquidated to satisfy demands for payment. In the letter to the court, Snyder wrote: "I know many will see this as a low point in the City's history. If so, I think it will also be the foundation of the City's future -- a statement I cannot make in confidence absent giving the City a chance for a fresh start, without burdens of debt it cannot hope to fully pay." The Associated Press and Reuters contributed reporting. CNBC and wires Which American municipalities have filed for bankruptcy?

| PBS NewsHour Which American municipalities have filed for bankruptcy? EMAIL February 8, 2014 at 3:43 PM EST Protestors rally outside the U.S. Courthouse in Detroit, Mich in December. Detroit is the largest city in U.S. history to file for bankruptcy. Credit: Bill Pugliano/Getty Images Across the country, from Vallejo, Calif . to Detroit, Mich., some cities that cannot repay their debts have taken the extreme step of declaring municipal bankruptcy. Cities file for bankruptcy under Chapter 9 of the Bankruptcy Code . Yet before a city can declare Chapter 9 bankruptcy, the city must establish it is eligible to do so according to state law. Chapter 9 bankruptcy is relatively rare. We’ve listed the cities and towns that have filed for Chapter 9 bankruptcy since 2008 on the map below. According to bankruptcy attorney Karol Denniston, when a city owes money to its employees, pensioners, and creditors, these debts constitute a contract — similar to a business taking out a loan. If the debts cannot be repaid, a municipality may consider bankruptcy as a last resort to negotiate reduced financial liabilities. But unlike individuals and corporations, cities are not always allowed to declare bankruptcy.

Bankruptcy is a federal process. In turn, a state must give its cities, towns, counties, and other municipalities — governmental administrative districts like irrigation authorities or hospital districts — the right to petition the federal government to restructure their debts. Without permission from the state, the federal government granting a bankruptcy petition for a municipality would violate a state’s authority and therefore, the 10th amendment . Some states, like Arizona and Washington, expressly grant municipalities the right to file for bankruptcy. Many other states establish conditions that must be met before a town can declare it is bankrupt. These conditions may involve an evaluation of the city’s finances or may require permission from a state governor. Illinois, Colorado, and Oregon have particularly restrictive laws that only allow specific types of municipalities or even specific districts to file for Chapter 9. Georgia and Iowa prohibit cities from declaring bankruptcy, though Iowa has an exception to the law for municipalities that become bankrupt for reasons beyond their control. A number of states haven’t written any specific law that determines whether or not a municipality can declare bankruptcy. Since cities in those states aren’t granted the right to file for Chapter 9, they cannot legally do so.

625286252962529Cities in financial straits weigh bankruptcyA wave of bankruptcies is moving across the country as cities try to manage crushing debt from pension obligations. NewsHour Weekend reports from Vallejo, Calif., with a cautionary tale for cities that are looking to bankruptcy as the solution.2014-02-08 17:09:00disabled2365174664FMXOzToxI4o As cities try to manage crushing debt from pension obligations, some municipalities are turning to bankruptcy as a last resort. NewsHour Weekend reports from Vallejo, Calif., with a cautionary tale for cities looking to bankruptcy as the solution. Detroit files for bankruptcy protection FacebookEmail Twitter Google+ LinkedIn Pinterest Detroit files for bankruptcy protection DETROIT -- The city of Detroit filed for Chapter 9 bankruptcy protection in federal court Thursday, laying the groundwork for an effort to bail out a city that is sinking under billions of dollars in debt.

Post to Facebook Detroit files for bankruptcy protection DETROIT -- The city of Detroit filed for Chapter 9 bankruptcy protection in federal court Thursday, laying the groundwork for an effort to bail out a city that is sinking under billions of dollars in debt. Check out this story on USATODAY.com: CancelSend A link has been sent to your friend's email address. Posted! A link has been posted to your Facebook feed. 482 To find out more about Facebook commenting please read the Conversation Guidelines and FAQs Detroit files for bankruptcy protection <!--iframe--> Nancy Kaffer, Stephen Henderson and Matt Helms, Detroit Free Press 8:36 p.m. EDT July 18, 2013 Detroit Emergency Manager Kevyn Orr announced that the city has reached key settlements with creditors as the city tries to relieve itself of billions in debt.

(Photo: Carlos Osorio AP) Detroit emergency manager released a plan in June to restructure the city's debt City's two pension funds filed suit to prevent retiree benefits from being cut in restructuring Filing begins 30- to 90-day period to determine whether city is eligible for Chapter 9 protection 25024 CONNECT TWEET 148 LINKEDIN 482 COMMENTEMAILMORE DETROIT -- The city of Detroit filed for Chapter 9 bankruptcy protection in federal court Thursday, laying the groundwork for a historic effort to bail out a city that is sinking under billions of dollars in debt and decades of mismanagement, population flight and loss of tax revenue. The bankruptcy filing makes Detroit the largest city in U.S. history to do so. The filing begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities. STORY: Detroit bankruptcy: What will happen next "The fiscal realities confronting Detroit have been ignored for too long.

I'm making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future," said Michigan Gov. Rick Snyder. "This is a difficult step, but the only viable option to address a problem that has been six decades in the making." AUTOMAKERS: Unlikely to be hurt by city's bankruptcy Detroit Emergency Manager Kevyn Orr, who in June released a plan to restructure the city's debt and obligations that would leave many creditors with much less than they are owed, has warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection. Snyder signed off on the filing in a letter attached to court documents filed Thursday in U.S. Bankruptcy Court in the Eastern District of Michigan. A spokeswoman for Snyder did not immediately return telephone calls Thursday. "It is clear that the financial emergency in Detroit cannot be successfully addressed outside of such a filing, and it is the only reasonable alternative that is available," Snyder said in the letter granting his state-required approval.

"In other words, the City's financial emergency cannot be satisfactorily rectified in a reasonable period of time absent this filing." Snyder continued: "I have reached the conclusion that this step is necessary after a thorough review of all the available alternatives, and I authorize this necessary step as a last resort to return this great City to financial and civic health for its residents and taxpayers. This decision comes in the wake of 60 years of decline for the city, a period in which reality was often ignored." Orr's spokesman Bill Nowling said, "Pension boards, insurers, it's clear that if you're suing us, your response is 'no.' We still have other creditors we continue to have meetings with, other stakeholders who are trying to find a solution here, because they recognize that, at the end of the day, we have to have a city that can provide basic services to its 700,000 residents." This week, the city's two pension funds (which have claims to $9.2 billion in unfunded pension and retiree health care liabilities) filed suit in state court to prevent Orr from slashing retiree benefits as part of a bankruptcy restructuring.

Ambac Assurance Guaranty, which insures some of the city's general obligation bonds, has also objected to Orr's plan to treat those bonds as "unsecured," meaning they're not tied directly to a revenue stream and would receive pennies on the dollar of their value. Ambac, and other creditors, have threatened to file suit. (Photo: Romain Blanquart, Detroit Free Press) A deal with creditors gives the city access to $11 million a month in casino tax revenues that Orr has said is key to maintaining city services while negotiations, in or out of bankruptcy court, take their course with other creditors and unions. Plunkett Cooney bankruptcy lawyer Doug Bernstein, who is not involved in the bankruptcy and is not representing any parties related to it, said Thursday that the filing was critical for the city, given a growing number of legal challenges. On Monday, an Ingham County Circuit Court judge was scheduled to hold a hearing on the city workers' and retirees' challenge to stop the city from filing for bankruptcy protection.

The employee groups, and separately the city's two pension funds in another lawsuit, argue that the governor — who must and has authorized the bankruptcy filing — cannot do so if the filings include plans to reduce pension benefits, because the state's constitution explicitly protects public pensions. If the state has such plans, it wasn't immediately presented in the court filing. &amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;lt;!--iframe--&amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;amp;gt;; Bernstein said preventing the court hearing Monday is probably a key part of the strategy behind a Chapter 9 petition by the city, because a ruling in favor of the employees could put a halt, at least temporarily, to any moves by Orr and Snyder to proceed with a bankruptcy petition. A bankruptcy filing immediately stays all such court proceedings. "The stay kicks in as soon as the filing, whether it's Friday or Monday," Bernstein said before Thursday's filing. "The key is taking advantage of the automatic stay.

Because of the lawsuit filed by the pension funds and the hearings coming up Monday, it became a factor, so to the extent that (Orr) wanted to continue negotiations with creditors, now the city is forced to" file a Chapter 9 petition. STORY: Detroit manager pitches debt recovery plan to creditors The 30- to 90-day eligibility fight could be prolonged beyond that time frame if creditors mount a significant challenge to Detroit's eligibility for bankruptcy. In other communities that have filed for Chapter 9 protection, such fights have extended the process a year or more, including Jefferson County, Ala., and Stockton, Calif., two of the largest municipal bankruptcy filings so far in the United States. Detroit's bankruptcy is by far the largest of its kind in U.S. history, in terms of the city's population of about 700,000 and the amount of its debts and liabilities, which Orr has said could be as high as $20 billion. Because of the stakes involved, and the impact on residents statewide, as well as 30,000 current and retired city workers and Detroit's ability to stay in business, the case could be precedent setting in the federal judiciary.

It also could set an important trajectory for the way troubled cities nationwide settle their financial difficulties. Bernstein noted that Orr has said repeatedly his office would "negotiate with creditors until and unless we find that the negotiations won't bear fruit, with the understanding that the city has a limited amount of time" for those talks. City Council President Pro Tem Andre Spivey said he understood that negotiations Orr was having with creditors weren't as fruitful as he'd hoped they be, and that he hopes the bankruptcy process will be relatively quick. But he stressed to residents that they needn't worry about the impact of the filing immediately. "City services we provide will not be shut down," Spivey said. "We'll still be providing services, but the challenge is where we're going to get to as we go through the bankruptcy process." The city has lost more than half of its population over the last 60 years. In 1950, the city was the fifth-largest city in the country with a population of around 1.8 million. Today its population is estimated at just under 700,000.

<!--iframe--> 25024 CONNECT TWEET 148 LINKEDIN 482 COMMENTEMAILMORE Read or Share this story: NEVER MISS OUT The Short List Let us bring the headlines to you every night. Stay current and catch up on the biggest stories of the day. Billions in Debt, Detroit Tumbles Into Insolvency - The New York Times The New York Times U.S. |Billions in Debt, Detroit Tumbles Into Insolvency Search Continue reading the main story Photo The abandoned Brewster Wheeler housing projects, right, and the General Motors headquarters in downtown Detroit. Credit Fabrizio Costantini for The New York Times DETROIT — Detroit, the cradle of America’s automobile industry and once the nation’s fourth-most-populous city, filed for bankruptcy on Thursday, the largest American city ever to take such a course. The decision, confirmed by officials after it trickled out in late afternoon news reports, also amounts to the largest municipal bankruptcy filing in American history in terms of debt. “This is a difficult step, but the only viable option to address a problem that has been six decades in the making,” said Gov.

Rick Snyder, who authorized the move after a recommendation from the emergency financial manager he had appointed to resolve Detroit’s dire financial situation. Not everyone agrees how much Detroit owes, but Kevyn D. Orr, the emergency manager, has said the debt is likely to be $18 billion and perhaps as much as $20 billion. Continue reading the main story For Detroit, the filing came as a painful reminder of a city’s rise and fall. “It’s sad, but you could see the writing on the wall,” said Terence Tyson, a city worker who learned of the bankruptcy as he left his job at Detroit’s municipal building on Thursday evening. Like many there, he seemed to react with muted resignation and uncertainty about what lies ahead, but not surprise. “This has been coming for ages.” Advertisement Continue reading the main story Detroit expanded at a stunning rate in the first half of the 20th century with the arrival of the automobile industry, and then shrank away in recent decades at a similarly remarkable pace. A city of 1.8 million in 1950, it is now home to 700,000 people, as well as to tens of thousands of abandoned buildings, vacant lots and unlit streets.

From here, there is no road map for Detroit’s recovery, not least of all because municipal bankruptcies are rare. State officials said ordinary city business would carry on as before, even as city leaders take their case to a judge, first to prove that the city is so financially troubled as to be eligible for bankruptcy, and later to argue that Detroit’s creditors and representatives of city workers and municipal retirees ought to settle for less than they once expected. Some bankruptcy experts and city leaders bemoaned the likely fallout from the filing, including the stigma. They anticipate further benefit cuts for city workers and retirees, more reductions in services for residents, and a detrimental effect on borrowing. “For a struggling family I can see bankruptcy, but for a big city like this, can it really work?” said Diane Robinson, an office assistant who has worked for the city for 20 years. “What will happen to city retirees on fixed incomes?” But others, including some Detroit business leaders who have seen a rise in private investment downtown despite the city’s larger struggles, said bankruptcy seemed the only choice left — and one that might finally lead to a desperately needed overhaul of city services and to a plan to pay off some reduced version of the overwhelming debts. In short, a new start.

Photo Kevyn D. Orr, emergency manager, at a news conference on Thursday about the filing. Credit Paul Sancya/Associated Press “The worst thing we can do is ignore a problem,” said Sandy K. Baruah, president of the Detroit Regional Chamber. “We’re finally executing a fix.” The decision to go to court signaled a breakdown after weeks of tense negotiations, in which Mr. Orr had been trying to persuade creditors to accept pennies on the dollar and unions to accept cuts in benefits. All along, the state’s involvement — including Mr. Snyder’s decision to send in an emergency manager — has carried racial implications, setting off a wave of concerns for some in Detroit that the mostly white Republican-led state government was trying to seize control of Detroit, a Democratic city where more than 80 percent of residents are black. Advertisement Continue reading the main story The nature of Detroit’s situation ensures that it will be watched intensely by the municipal bond market, by public sector unions, and by leaders of other financially challenged cities around the country. Just over 60 cities, towns, villages and counties have filed under Chapter 9 , the court proceeding used by municipalities, since the mid-1950s.

Leaders in Washington and in Lansing, the state capital, issued statements of concern late Thursday. A White House spokeswoman said President Obama and his senior team were closely monitoring the situation. “While leaders on the ground in Michigan and the city’s creditors understand that they must find a solution to Detroit’s serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalize and maintain its status as one of America’s great cities,” Amy Brundage, the spokeswoman, said in a statement. Please verify you're not a robot by clicking the box. Invalid email address. Please re-enter. You must select a newsletter to subscribe to. Sign Up Privacy Policy The debt in Detroit dwarfs that of Jefferson County, Ala., which had been the nation’s largest municipal bankruptcy, having filed in 2011 with about $4 billion in debt. The population of Detroit, the largest city in Michigan, is more than twice that of Stockton, Calif., which filed for bankruptcy in 2012 and had been the nation’s most populous city to do so.

Other major cities, including New York and Cleveland in the 1970s and Philadelphia two decades later, have teetered near the edge of financial ruin, but ultimately found solutions other than federal court. Detroit’s struggle, experts say, is particularly dire because it is not limited to a single event or one failed financial deal, like the troubled sewer system largely responsible for Jefferson County’s downfall. Instead, numerous factors over many years have brought Detroit to this point, including a shrunken tax base but still a huge, 139-square-mile city to maintain; overwhelming health care and pension costs; repeated efforts to manage mounting debts with still more borrowing; annual deficits in the city’s operating budget since 2008; and city services crippled by aged computer systems, poor record-keeping and widespread dysfunction. All of that makes bankruptcy — a process that could take months, if not years, and is itself expected to be costly — particularly complex. Photo An abandoned hydrant. City services have been cut before; fears are that the bankruptcy filing may lead to more cuts. Credit Fabrizio Costantini for The New York Times “It’s not enough to say, let’s reduce debt,” said James E.

Spiotto, an expert in municipal bankruptcy at the law firm of Chapman and Cutler in Chicago. “At the end of the day, you need a real recovery plan. Otherwise you’re just going to repeat the whole thing over again.” The municipal bond market will be paying particular attention to Detroit because of what it may mean for investing in general obligation bonds. In recent weeks, as Detroit officials have proposed paying off small fractions of what the city owes, they have indicated they intend to treat investors holding general obligation bonds as having no higher priority for payment than, for instance, city workers — a notion that conflicts with the conventions of the market, where general obligation bonds have been seen as among the safest investments and all but certain to be paid in full. Advertisement Continue reading the main story Leaders of public sector unions and municipal retirees around the nation will be focused on whether Detroit is permitted to slash pension benefits, despite a provision in the State Constitution that union leaders say bars such cuts. Officials in other financially troubled cities may feel encouraged to follow Detroit’s path, some experts say.

A rush of municipal bankruptcies appears unlikely, though, and leaders of other cities will want to see how this case turns out, particularly when it comes to pension and retiree health care costs, said Karol K. Denniston, a bankruptcy lawyer with Schiff Hardin who is advising a taxpayer group that came together in Stockton after its bankruptcy. “If you end up with precedent that allows the restructuring of retirement benefits in bankruptcy court, that will make it an attractive option for cities,” Ms. Denniston said. “Detroit is going to be a huge test kitchen.” Around this city, there was widespread uncertainty about what bankruptcy might really mean, now and in the long term. Officials said city workers were being sent letters, notifying them that city business would proceed as usual, from bills to permits. A hot line was planned for residents and others with questions and worries. For some Detroiters, recent memories of bankruptcies by Chrysler and General Motors — and the re-emergence of those companies — appeared to have calmed nerves. But experts say corporate bankruptcy procedures are significantly different from municipal bankruptcies. In municipal bankruptcies, for instance, the ability of judges to intervene in how a city is run is sharply limited.

And municipal bankruptcies are a form of debt adjustment, as opposed to liquidation or reorganization. Here, residents are likely to see little immediate change from the way the city has been run since March, when Mr. Orr arrived to oversee major decisions. A bankruptcy lawyer, he is widely expected to continue to run Detroit during a legal process. Mayor Dave Bing and Detroit’s elected City Council are still paid to hold office and are permitted to make decisions about day-to-day operations, though Mr. Orr could remove those powers. Mr. Orr has said that as part of any restructuring he wants to spend about $1.25 billion on improving city infrastructure and services. But a major concern for Detroit residents remains the possibility that services, already severely lacking, might be further diminished in bankruptcy. About 40 percent of the city’s streetlights do not work, a report from Mr. Orr’s office showed. More than half of Detroit’s parks have closed since 2008. Monica Davey reported from Detroit, and Mary Williams Walsh from New York.

A version of this article appears in print on July 19, 2013, on Page A1 of the New York edition with the headline: Billions in Debt, Detroit Tumbles Into Insolvency. Order Reprints | Today's Paper | Subscribe Detroit Becomes Largest U.S. City to File for Bankruptcy - ABC News ABC News Detroit Becomes Largest U.S. City to File for Bankruptcy By Susanna Kim WATCH City of Detroit Files for Bankruptcy 0 Shares Email Detroit became the biggest American city to file for bankruptcy after its emergency manager filed for Chapter 9 protection on Thursday, with more than $18 billion in accrued obligations, according to Michigan's governor. In the filing with the U.S. Bankruptcy Court in the Eastern District of Michigan, obtained by ABC News, state-appointed emergency manager Kevyn Orr indicates that the city's liabilities are "more than $1 billion" and its estimated number of creditors are "over 100,000." In meetings with debt holders last month, Orr had indicated there was a 50-50 chance the city would need to file for Chapter 9 protection as it tried to convince creditors to accept pennies on the dollar to deal with its financial problems.

If the bankruptcy filing is approved, Detroit's assets could be liquidated to meet creditor payments. Included in the bankruptcy filing is a four-page letter signed by Michigan Gov. Richard Snyder and dated July 18 in which he writes, "The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services." Snyder wrote, "The City has more than $18 billion in accrued obligations." He writes that a "vital point" made by Orr is that "Detroit tax rates are at their current legal limits, and that even if the city was legally able to raise taxes, its residents cannot afford to pay additional taxes." "The City's creditors, as well as its many dedicated public servants, deserve to know what promises the City can and will keep," Snyder wrote. "The only way to do those things is to radically restructure the City and allow it to reinvent itself without the burden of impossible obligations. Despite Mr. Orr's best efforts, he has been unable to reach a restructuring plan with the City's creditors. I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection." Jefferson County, Ala., previously held the title of largest municipal bankruptcy.

Attorneys for Jefferson County have submitted plans to exit its historic $4.23 billion bankruptcy. Orr, who was hired in March to assist with the city's budget, had tried to appeal to creditors by warning of the effect on the people of Detroit. "If they can see what it's like for Detroiters, what they endure every day in this city, I think they'll begin to understand what's at stake," Orr said earlier this month to reporters. To help save money, the city had closed certain public offices on occasional budget-required furlough days, including its City Council and Mayor's Office. In a statement, Detroit Mayor Dave Bing said, ""Today's bankruptcy filing is an unfortunate event in our City's history. While it has never been my desire that the City file for bankruptcy, I understand why Kevyn found it necessary to do so. I said when I entered office four years ago that our City was in a financial crisis. I also said we cannot simply cut our way out of this situation." The city of Harrisburg, Pa., is still trying to fill its coffers after filing for bankruptcy in 2011. The city is hosting an auction of Old West items this week from an American West museum that never opened.

Michigan's emergency managers were created by the Local Government and School District Fiscal Accountability Act, introduced by Republican Gov. Rick Snyder and signed into law March 16, 2011. Emergency managers have grabbed the reins in other fiscally troubled cities in Michigan, like Ecorse (population 11,230). Bankrupt Cities Using Emergency Financial Managers to Recover Detroit's population has fallen as much as 25 percent in the last decade as it lost a quarter-million residents between 2000 and 2010. In 2011, the city had the fastest population decline in the city's history -- reaching the level of the 1910 census. 0 Shares Detroit files for bankruptcy - Jul. 18, 2013 Detroit files for bankruptcy by Chris Isidore @CNNMoney July 18, 2013: 7:25 PM ET Protestors in Detroit last month objected to plans to cut pension benefits of city workers and retirees. Detroit filed for bankruptcy Thursday, becoming the nation's largest public sector bankruptcy. The move could slash pension benefits to city workers and retirees, and leave bond holders with only pennies on the dollar.

The bankruptcy was filed by Emergency Manager Kevyn Orr and approved by Michigan Gov. Rick Snyder. Snyder said the financial condition of the city left him no choice. "Now's our opportunity to stop 60 years of decline," Snyder said at a Friday news conference with Orr. "How long had this been going on and people were kicking the can down the road and not doing something? We're doing something." Snyder has said that 38% of the city's budget is being spent on "legacy costs," such as pensions and debt service. He said police take almost an hour to respond to calls, compared to a national average of 11 minutes, and that 40% of street lights in the city are turned off. "Does anybody think it's OK to have 40-year-old trees growing through the roofs of dilapidated houses," Orr said. But public employee unions are sure to fight the move, charging that the city did not negotiate in good faith and should not be allowed to walk away from obligations made to employees and retirees. The Detroit Fire Fighters Association said it was "very disappointed" with the bankruptcy filing. "We are working with other Detroit employees to form a unified coalition to address the financial concerns of Detroit," the group said.

"Detroit's Fire Fighters will continue to protect and serve during this difficult time, regardless of the economic challenges." Related: Retired Detroit firefighter -- 'My pension is what I was promised' Orr already halted payments on about $2 billion in debt last month, saying the city needed to preserve its dwindling supply of cash. The city faces total liabilities of about $18 billion. Orr's reorganization plan calls for cutting $11.5 billion in debt down to $2 billion. That would mean that investors and retirees would receive an average of just 17% of what they are owed. Specific plans for the cuts are unknown at this time. No municipal bankruptcy has ever resulted in involuntary cuts to retiree benefits, said Michael Sweet, a California bankruptcy attorney. "It's relatively easy to blow off a creditor. It's much harder when it's people who are the fabric of your community," he said. "You need a police force, you need a fire department.

You're saying [to them] you're not worth what you were previously promised." Related: Casinos, not cars, are keeping Detroit afloat Sweet said that case law on whether pensions can be cut this way is very limited, and it could take years for a court fight over such cuts to work its way to the U.S. Supreme Court. Given the poor state of funding for many public sector pension funds nationwide, "it's a big enough question, that (the Supreme Court) is where it likely will have to go," he said. When employees of a bankrupt business lose their promised pensions, the Pension Benefit Guaranty Corp. steps in and provides a minimal level of benefits. But that federal agency doesn't back pensions in the public sector. Related: Detroit bankruptcy filing came with only 5 minutes to spare Retirees and city employees say they can't accept cuts in their pension benefits. "How am I supposed to live without my pension?" said David Sole, 65, after a protest in Detroit last month. Sole retired from the city's water department in January after 22 years. Investors say the bankruptcy will make it more difficult for cities and towns everywhere to raise the money they need to build bridges, schools and other infrastructure.

It will also hurt municipal bonds held by individual investors. There are more than $1 trillion worth of bonds at risk, said Peter Hayes, head of municipal bonds at BlackRock. He said there will be a ripple effect nationwide. Related: What's next for Detroit Detroit may sell its art treasures Orr said that the city needs to cut debt to restore services and lower costs, such as taxes and insurance, which he says have chased businesses and residents out of the city. Detroit's population has fallen 28% since 2000. The unemployment rate, while down from a peak of 27.8% in the summer of 2009 -- when General Motors ( GM ) and Chrysler Group were going through their own bankruptcies -- is still at 16.3%, nearly twice Michigan's statewide average. While the auto industry has enjoyed a resurgence with strong car sales and profits, most of the industry's Michigan plants lay outside of city limits. -- CNN's Poppy Harlow and CNNMoney's James O'Toole and Aaron Smith contributed to this report. Are you a Detroit city employee or retiree? We want to hear your story. Please contact CNNMoney .

CNNMoney (New York) First published July 18, 2013: 4:44 PM ET Detroit becomes largest U.S. city to enter bankruptcy FacebookEmail Twitter Google+ LinkedIn Pinterest Detroit becomes largest U.S. city to enter bankruptcy DETROIT — U.S. Bankruptcy Judge Steven Rhodes is set to rule Tuesday on whether the city of Detroit is eligible for bankruptcy. Post to Facebook Detroit becomes largest U.S. city to enter bankruptcy DETROIT — U.S. Bankruptcy Judge Steven Rhodes is set to rule Tuesday on whether the city of Detroit is eligible for bankruptcy. Check out this story on USATODAY.com: CancelSend A link has been sent to your friend's email address. Posted! A link has been posted to your Facebook feed. 160 To find out more about Facebook commenting please read the Conversation Guidelines and FAQs Detroit becomes largest U.S. city to enter bankruptcy Nathan Bomey, Brent Snavely and Alisa Priddle, Detroit Free Press Published 9:58 a.m. ET Dec. 3, 2013 | Updated 7:53 p.m. ET Dec.

3, 2013 CLOSE x Share Detroit Mayor Dave Bing says there is "going to be a lot of pain" for people following a judge's ruling that the city is eligible to fix its finances in bankruptcy court. (Dec. 3) AP Detroit filed for Chapter 9 bankruptcy protection July 18. The city of Detroit from midtown. (Photo: Carlos Osorio, AP) Pension reductions could be part of mix City could sell assets, including Detroit Institute of Arts property Judge would like to see a draft plan by the end of the year 4563 CONNECT TWEET LINKEDIN 160 COMMENTEMAILMORE DETROIT — The city of Detroit officially became the largest municipality in U.S. history Tuesday to enter Chapter 9 bankruptcy after a judge declared it met the specific legal criteria required to receive protection from its creditors. The landmark ruling ends more than four months of uncertainty over the fate of the case and sets the stage for a fierce clash over how to slash an estimated $18 billion in debt and long-term liabilities that have hampered Detroit from attacking pervasive blight and violent crime. STORY: How Detroit went broke "It is indeed a momentous day," U.S.

Bankruptcy Judge Steven Rhodes said at the end of a 90-minute summary of his ruling. "We have here a judicial finding that this once-proud city cannot pay its debts. At the same time, it has an opportunity for a fresh start. I hope that everybody associated with the city will recognize that opportunity." In a surprise decision Tuesday morning, Rhodes also said he will allow pension cuts in Detroit's bankruptcy. He emphasized that he won't necessarily agree to pension cuts in the city's final reorganization plan unless the entire plan is fair and equitable. "Resolving this issue now will likely expedite the resolution of this bankruptcy case," he said. Rhodes' verbal ruling, which precedes a 140-page written opinion to be issued Wednesday, gave Detroit the green light to enter Chapter 9 bankruptcy. "The court finds that Detroit was and is insolvent," he said. "The court finds that the city was generally not paying its debts as they became due." Rhodes said bankruptcy was a "foregone conclusion for a very long time. Cities often wait longer to file for bankruptcy than they should have, and the city of Detroit was no exception." Rhodes said he will not issue a stay on the bankruptcy, meaning the case will proceed.

“The court finds that Detroit was and is insolvent. The court finds that the city was generally not paying its debts as they became due.” Judge Steven Rhodes, U.S. Bankruptcy Court Even though Michigan Council 25 of the American Federation of State, County and Municipal Employees already has filed an appeal — and more will come in days ahead — the bankruptcy code provides for Chapter 9 to continue while appeals are pending that challenge, said Clark Hill lawyer Robert Gordon, who represents the city's pension funds and will be filing an appeal. John Pottow, a University of Michigan bankruptcy law professor, said Rhodes clearly was urging the city to reach a consensual resolution with its creditors. "Bottom line: He's pushing negotiation," Pottow said in e-mail. Rhodes scolded the city for rushing through negotiations with creditors before its filing, noting they only had 30 days to offer a counter. Saying that amount of time is "simply far too short," Rhodes ruled the city did not satisfy good faith requirements to try to negotiate with creditors outside of bankruptcy court. Lawyers for unions and retirees who fought to persuade the judge to reject Detroit's eligibility for bankruptcy found a silver lining in Rhodes' criticism of the city's negotiation efforts.

"The city has to step up now and negotiate more reasonable and more fairly," said Lynn Brimer, a lawyer for the Detroit Retired Police Members Association. Despite criticism of Detroit's negotiations, Rhodes said negotiating in good faith was impractical for the city because its financial crisis was growing worse, and creditors filed several lawsuits that could have derailed a bankruptcy filing. (Photo: Spencer Platt, Getty Images) The city now will proceed with its plan to introduce a proposal to restructure its debt and reshape government operations. Rhodes asked lawyers for Jones Day, the law firm that represents the city in bankruptcy court, if a first draft of the so-called "plan of adjustment" could be filed by the end of the year. Lawyer David Heiman responded, "We're not quite certain," adding it would be far in advance of the judge's March deadline. Detroit Emergency Manager Kevyn Orr said his team plans to submit the plan of adjustment "in the coming weeks," file a disclosure statement early next year and work to exit Chapter 9 protection by the end of September. "Time is of the essence, and we will continue to move forward as quickly and efficiently as possible," Orr said in a statement.

"We hope all parties will work together to help us develop a realistic restructuring plan that improves the financial condition of Detroit and the lives of its 700,000 citizens." The plan is expected to include controversial cuts to unsecured creditors and asset sales, including a potential spinoff of the water and sewer department and the possible sale of Detroit Institute of Arts property. Rhodes said one-time infusions of cash will not provide for a sustainable financial future, but he did not rule out the possibility of approving asset sales. In a press conference after the ruling, Orr message's to pensioners was this: "We're trying to be very thoughtful, measured and humane," but cuts are necessary. “You can treat creditors differently.” Lawyer Sharon Levine, American Federation of State, County and Municipal Employees Gordon, the lead lawyer for the city's two pension funds, said he believes the judge cares about residents and the plight of pensioners. "I hope it plays out when a plan is proposed," he said of expected pension cuts. While the judge cautioned the city he would scrutinize proposed cuts in the restoration plan, Gordon did not interpret it as a warning to the city to protect the money.

Other lawyers representing retirees expressed disappointment that individuals were being lumped with bondholders and financial institutions. Major creditors objecting to the bankruptcy included AFSCME; the United Auto Workers; Detroit's two pension funds; the city's public safety unions, retiree associations and a committee created to officially represent retirees during the bankruptcy. AFSCME lawyer Sharon Levine said bankruptcy is a powerful and flexible tool. "You can treat creditors differently," she said. The ruling comes after an exhaustive nine-day bankruptcy eligibility trial that concluded Nov. 8. During that trial, Rhodes gave unions and retiree groups an opportunity make their argument that the city's bankruptcy case should be rejected. (Photo: Carlos Osorio, AP) Unions and retirees argued that Orr conducted no substantive negotiations with creditors and argued the city fell short of its duty to conduct "good faith" negotiations before filing for bankruptcy. No financial creditors objected to the filing. By July 18, the day Detroit filed for bankruptcy, the city was being bombarded by lawsuits, facing dwindling cash flow and failing to deliver vital services — adding credence to Jones Day bankruptcy lawyer Bruce Bennett's argument that reaching a deal with more than 100,000 creditors would have taken too long.

"It was clear to Judge Rhodes that negotiations were not going to go anywhere," Laura Beth Bartell, a Wayne State University law professor, said in a recent interview. Rhodes ruled the city is legally insolvent and obtained the necessary legal authorization from Michigan Gov. Rick Snyder to enter Chapter 9. Brimer, who represents Detroit's retired police officers, said the fight isn't over. "Perhaps it's fair to say the fight has just begun," she said. Mayor Dave Bing sounded an optimistic note after the ruling, saying it will be beneficial in the long run. "There's going to be a lot of pain for a lot of different people," he said. "But in the long run, the future will be bright." Contributing: Joe Guillen, Detroit Free Press 4 main rulings on eligibility Here's how U.S. Bankruptcy Judge Steven Rhodes ruled Tuesday on each criteria of the eligibility question as required under Chapter 9 of U.S. bankruptcy code. Criteria Ruling Did the city obtain the state's approval to file for bankruptcy? Rhodes ruled that Michigan Gov. Rick Snyder legally gave the city the OK to file for bankruptcy in July. Is the city insolvent?

"The court finds that the city was generally not paying its debts as they became due. ... The court finds that the city of Detroit was and is insolvent." Did the city negotiate in good faith? Allowing only a month to negotiate was not enough, Rhodes said. "This calendar was very tight and did not request counter proposals," he said. "The creditors cannot be faulted for failing to offer counter proposals when they did not have enough information to evaluate the city's initial vague proposal." He ruled that the city did not negotiate in good faith but filed the petition for bankruptcy in good faith. Was it impractical to negotiate in good faith? Rhodes found that negotiating in good faith was impractical. And "accordingly, the court finds that pre-filing negotiations were impracticable." Live coverage from the federal courthouse in Detroit See the details as they happened in this Twitter blog by Free Press reporters Nathan Bomey and Brent Snavely.

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Question: Which US city filed for bankruptcy in July?
Answer: Detroit