Detroit’s Struggle for Bankruptcy
“Detroit” is a loaded word. Today, it conjures images of decay, despair, and rust. But drawing on the past, it also reminds us of industrial glory, automotive power, and burgeoning wealth. No city is iconic of both wild success and abysmal failure in quite the way Detroit has become. In the twenty first century, the languishing city is grappling with a new battle, not against crime, drugs, or decay — but against total financial collapse. As Detroit’s struggle for bankruptcy unfolds, America waits to see whether the city will perish forever — or rise like a phoenix.
Detroit Seeks Financial Relief Through Bankruptcy
Unfortunate as it is, no one really thinks of Detroit as a “successful” or “promising” city these days. Documentaries and photo essays detailing the Motor City’s long and painful spiral into creeping decay and crushing debt are innumerable, and some even refer to Detroit in its gutted present-day form as “the Motorless City.” Nonetheless, no one quite expected what came during the summer of this year: for the City of Detroit to announce plans for bankruptcy.
Emphasis on “plans for.”
If the city of Detroit could have proceeded forward with a bankruptcy at will, the legal (and certainly financial) landscape of the city would be looking different than it does today. But Detroit, as an entity, will have to first gain legal approval of a judge. There are only two possible outcomes: Detroit can be granted eligibility for bankruptcy, or the case can be dismissed — and the “Motorless City” will plummet back into the same cold and dark financial depths from whence it came. With the added burden of lawsuits.
Judge Rhodes to Decide Detroit’s Fate
After a downward spiral that lasted for decades without any significant relief, the city of Detroit officially filed for bankruptcy on July 18, 2013. Now, almost exactly four months later, whether the ailing city will be granted that bankruptcy is on the verge of being revealed.
Presiding over the highly unusual case is Judge Steven Rhodes. Rhodes is tasked with the epic decision of whether or not to grant Detroit Chapter 9. In order for the bankruptcy to be granted, several legal conditions have to be met, such as:
- Insolvency. Do the city’s debts outweigh its assets? Which debts, if any, will become dischargeable?
- Constitutionality. Is the bankruptcy legal under the Michigan State Constitution?
- Good Faith. Has the city been negotiating with its creditors in “good faith” (i.e. without any elements of deception or fraud)?
Whatever the outcome, Rhodes knows it will be momentous, for the city and for its approximately 700,000 residents — and he’s taking the decision seriously. In the words of Stuart Gold, bankruptcy attorney, “He has made it known from Day One that his primary goal is to see that the citizens of Detroit are not harmed.” Nor is Rhodes one to beat around the bush in court, retorting sharply against attorney arguments with comments like, “This argument does not impress me, counselor, don’t go there,” or, “Those analogies are so imperfect it’s not even worth trying.”
If you are in need of an experienced bankruptcy attorney, contact the law offices of Young, Marr & Associates online, or call us today at (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania.
☑ Been paying credit card balances that seem to never go down?
☑ Lost your job and are now having trouble keeping up?
☑ Attempted to work out a payment arrangement to no avail?
☑ Been notified of a mortgage foreclosure action?
☑ Been denied for a mortgage or other line of credit?
If the answer to any of these questions is “yes” then bankruptcy may be an option that you should consider.