Why did you settle in Detroit
Comeback for the bankrupt city of Detroit?
How broken is Detroit, is there hope for America's bankrupt "Motor City", the once dazzling metropolis for US auto production? Steven Rhodes recently took a three-hour bus tour to get a personal impression of the situation.
New businesses have settled in Detroit
He saw run-down houses in abundance, broken windows, paint peeling off the walls. But there was also the contrast: refurbished buildings with cheerful paintwork, freshly raked gardens with colorful flowers and new shops. What Rhodes thinks about the appearance of Detroit matters. He is the bankruptcy judge who will rule on whether a city's reorganization plan is fair to creditors and "feasible" enough to be implemented - perhaps as early as mid-October.
A chain of unfortunate circumstances
The eagerly awaited examination procedure begins on Tuesday (02.09.2014). US media speak of fateful days for Detroit. A year ago, the former boom town filed for bankruptcy - the largest city bankruptcy in US history to date. It was a chain reaction: Recession, the crisis in the auto industry, mismanagement, corruption and crime led Detroit to financial ruin, with a mountain of debt of over 18 billion dollars (13.7 billion euros). Detroit now wants to get seven billion dollars off the books. In addition, 1.4 billion dollars are to be spent in the next ten years to decorate the ailing cityscape: for infrastructure, demolition and modernization, for the police and fire department. Detroit should become safer, cleaner and more efficient - this is the rescue plan that Rhodes has in place.
A city with an uncertain future
The year between filing for bankruptcy and the actual proceedings before the bankruptcy judge was already full of fierce fighting at the negotiating table and in court. It's not just about how the numerous bondholders are to be compensated, but also about the pensions for around 30,000 city employees, active and retired. And it's about the future of Detroit's art treasures - 66,000 paintings and sculptures from the Detroit Institute of Arts, including paintings by Matisse, Monet, and Van Gogh. Agreements have already been reached with many creditors through the intermediary of the Michigan state bankruptcy administrator, Kevyn Orr. In July, the city took a particularly important hurdle: after long arguments, the majority of active and retired city officials agreed to a 4.5 percent cut in their retirement payments
Dispute over works of art
According to the Detroit Free Press, the biggest opponents of the restructuring plan are two bond insurers, Syncora and Financial Guaranty Insurance Co. They claim above all that the retirees would be far better off with the relatively mild cuts than they themselves. that they should be settled with just six cents for every dollar of the total of 1.4 billion bonds they have insured. The two financial firms do not want to see why the city is not selling its art treasures, the value of which, according to the Detroit Free Press, is estimated at $ 4.6 to $ 8.1 billion.
However, the city insists that it is legally not allowed to sell the works of art at all. However, their rescue plan provides for the paintings and sculptures to be transferred to an independent charitable trust company. In return, the city will receive a total of $ 816 million from private foundations, museum sponsors and the state of Michigan over 20 years. And this money was factored in when determining the pension cuts: otherwise these cuts would have been larger.
Experts expected Rhodes to make a decision by mid-October. Getting the city back on its feet will not be easy. The population has shrunk from 1.8 million in the 1950s to almost 700,000, and thousands of houses are empty. Unemployment is well above the national average and the crime rate is among the highest in the United States. Now, the Detroit Free Press quoted Judge Rhodes as saying, a trial will "determine the future of the city of Detroit."
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