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07202013-2In an extraordinary political drama, Detroit, yes the city, filed for Chapter 9 bankruptcy protection on Thursday, July 18th. It has faced a number of economic hurdles in recent years, including plummeting population, sinking tax revenue, and skyrocketing debt. By filing for Chapter 9, city officials hope to gain protection from unions and creditors.  Watch Detroit’s emergency manager, Kevyn Orr, discuss the bankruptcy. Read and watch an interview with Orr and Michigan Governor Synder.

07212013-4However, the very next day a state judge rejected their Chapter 9 application. According to Judge Aquilina, the application violated the state Constitution because, should Detroit receive Chapter 9 protection, it might reduce the pensions of retired public employees. Pensions are protected under Michigan’s Constitution. Pensions represent a substantial piece of Detroit's debt. The case now rests in the state Court of Appeals. Detroit officials will have to prove they have no other option but to file for bankruptcy. Challengers, including labor unions, creditors, and pensioners, will either argue that Detroit’s debt does not warrant bankruptcy or that city officials have not tried hard enough to negotiate another solution. 

This is Now


Detroit’s financial problems are not new. Over the past decade, residents have watched the city slowly slide toward bankruptcy. Bankruptcy is not a simple issue. A knotty ball of factors conspired to create Detroit’s problems. Examine some of Detroit’s statistics. The Associated Press shares Detroit’s ravaged economy. Be sure to open and to read the summary, What happened and what comes next?

07202013-3Bankruptcy means you have more expenses than income. Part of the bankruptcy process is to assess if you own anything that is valuable and, oftentimes, to sell things in order to have cash to pay creditors. For Detroit residents and officials this will mean a complicated, emotional, and likely contentious process. What are Detroit’s assets? Which treasures will the city part with forever? What would be the long-term cost of emptying the Historical Museum, the Institute of Arts, and/or the Zoo of its treasures? How much is a breeding female giraffe worth? What about a collection of 62 classic cars that capture the ‘Motor’ in Detroit’s Motor City heritage? How much might be garnered for Van Gogh and Matisse paintings? The battle brewing over Detroit’s Museum collection is representative of the battle that will consume many Detroit valuables.

07212013-6For residents, Detroit’s shrinking bank accounts means loss of services, decaying infrastructure, and unemployment. The trailer to the movie Detropia reveals how Detroit’s burdens rest upon the shoulders of everyday people. The trailer begins with a quote: “This isn’t just a Detroit problem…it’s an American problem.” Explain what makes this an American problem. Do you agree?

07212013-7During the past decade, photographers Yves Marchand and Romain Meffre took their cameras to the streets of Detroit and photographed what they found. Read their statement and then view their online show, The Ruins of Detroit. The identity of each place is printed under the photograph. Marchand’s and Meffre’s photographs reveal an almost apocalyptic scene. Explain which image resonates most with you.

That Was Then

07212013-11Detroit’s financial crisis may not come as a surprise; however, it seems especially tragic and unsettling because the city was once the hub for American manufacturing and innovation, and embodied the American Dream. View a slideshow that explores Detroit’s history. Read about Detroit’s historic places, and explore historic sites in Detroit’s inner city. (Read numbers ten through twenty-nine.)

07212013-9Detroit—The Motor City—is known for its automotive and manufacturing roots. Henry Ford transformed Detroit into a manufacturing powerhouse. He revolutionized the automotive industry by redesigning how cars were built—via assembly line. Ford and other automotive companies brought Detroit prestige, wealth, and stability.  As this 2011 Chrysler Super Bowl advertisement featuring Eminem showed, it is a city to be proud of despite, or maybe because of its contradictions—beautiful and gritty, luxurious and skilled, cultural and street smart, persistent and inspiring.

07212013-12Detroit is also known as ‘Motown’. ‘Motown’ is both a nickname for Detroit—a combination of ‘motor’ and ‘town’—and Berry Gordy’s Detroit-based record company known for its successful integration of pop, gospel, jazz and soul. View a library of classic Motown artists. Treat yourself to the sounds of several artists: click on their icon, read a brief biography, and then scroll to the bottom of the page and click on the audio link to hear an excerpt of one of their hits.

A Rare Move—

07192013-1Detroit, the once mighty Motor City, is the largest United States city to pursue bankruptcy. It is not the only municipality to file for bankruptcy. However, it is unusual—the hail Mary for the financially desperate.  View a map of cities, towns, and other municipalities that have filed for Chapter 9. Track the utilities and other municipalities (in gray); what categories do these fit into and which category is largest? What theories do you have to explain this?

As Detroit’s case advances through the appeals process, view a map of state bankruptcy laws.  Does your home state allow Chapter 9 filings?