Chapter 9

In 2013, the city of Detroit, plagued by policies that were anti-business and fostered rampant crime, political corruption, property devaluation, infrastructure in disrepair, and high unemployment, defaulted on its municipal bonds. With its debt estimated at $18-20 billion, Detroit had to file for Chapter 9 bankruptcy protection, the largest in U.S. history.

Chapter 9 bankruptcy proceedings offer U.S. states, cities, counties, districts and municipal utilities protection from creditors in order to restructure and resolve unpaid debt. As municipalities aren’t tangible assets unto themselves that can usually be liquidated for private ownership, Chapter 9 provides the guidelines under State Law for restructuring terms to pay off creditors that can be subject to approval by majority vote.

The voting public, unfortunately, does not learn from other cities’ blunders, and is likely destined to repeat them.