Chapter 9 Bankruptcy: Detroit

Mon, Jul 22, 2013

Bankruptcy

Some rights reserved by Bob JagendorfChapter 9 bankruptcy is a type of bankruptcy that you do not hear about too often. Typically, most people know about Chapter 7 and 13—for individuals and businesses. Then there is Chapter 12, for family farms or fisheries.

Chapter 9 bankruptcy dates back to the Great Depression. According to the United States Courts site, The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts.” To learn more about it, check out their website.

We previously posted a blog post about Chapter 9 bankruptcy and how it affected towns in California and Alabama. Detroit filed bankruptcy on Thursday, July 19, 2013 in federal court. According to USA Today, it is the largest city in U.S. history to do so and is seeking to renegotiate 18.5 billion dollars of debt and liabilities. The bankruptcy filing comes after previous plans were created to restructure their debt.

Obviously, Chapter 9 bankruptcy comes with concerns because of its far-reaching effects. In bankruptcies like this, traditional city expenses are a concern of course. That is in addition to pensions or other promised expenses—money that many people and businesses are counting on. The USA Today article shares the actual filing papers, along with further details about the challenges that Detroit faces. Also of interest is the list of other municipalities that have filed Chapter 9 bankruptcy.

Attorney Christopher D. Smith is a Lakewood Ranch, Florida attorney with SmithLaw Attorneys. He concentrates in bankruptcy, civil litigation, probate, and elder exploitation cases in the Sarasota and Bradenton area. Call 941 907-4774 to learn more and to ask about our free consultations.

Image: Some rights reserved by Bob Jagendorf

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