NEW YORK
US city of Detroit, once a symbol of US industrial power, filed for bankruptcy, has a very long and difficult process in prospect with approximately $18.5 billion long term debt.
The bankruptcy of the Detroit-based automotive companies in 2008 economic crisis, brought by the largest bankruptcy of US history.
Failiure in competing with, particularly Japanese and South Korea companies, caused Detroit to fall back in the automotive sector.
Middle and upper income levels had to migrate other cities as the companies left Detroit.
According to the data presented by city administration, offices and houses became empty and the tax income of the city fell, as the population, which was around 1.8 million in 1950s decreased to around 700.000,
While the empty buildings raised the security risks, crime rates' making a peak, problems in city-lightening, loss in numbers of public workers including police and fire extinguishers, caused the city to lose its popularity.
In the last 6 years, the spendings exceeded the tax income, and the budget deficit which was $ 326.6 million by the end of 2012, is expected to exceed $ 1.3 billion in 2017.
Unemployment rate reached 18.3 percent, increasing by 3 times since 2000.
Long and difficult process in prospect
Detroit, filed for bankruptcy upon the approval of Michigan Governor Rick Snyder, awaits for the court decision whether it was appropiate or not for the execution of "9th chapter for municipalities in bankruptcy".
If the court issues a positive decision, debtees must reconcile with the city administration, and restructure the due date and interest of the debts. Otherwise, the debtees will have difficult time in making the city-belongings, including zoo and artworks sold.
Even if the city is accepted to be treated within the "9th chapter", the bargaining between the court and administration and the judicial process are predicted to take more than one year, while costing hundreds of thousands of USD damage.
It might take decades for the city to revitalize itself, since increased taxes, salary deductions may further reduce the population.
Washington gives no green light
Detroit's Emergency Manager Kevyn Orr said, "It was a difficult decision but we had to take it. We believe it was the right time to apply for the 9th chapter."
The issue is also high on federal agenda. White House Press Secretary Jay Carney said in a Friday press briefing that the White House would work with Detroit as the city files for bankruptcy, but insisted that the issue was between "the city and its creditors."
