As lawyers for some of the thousands of creditors arrived Wednesday, they passed protesters holding a banner saying: “Cancel Detroit’s debt. The banks owe us.”
Michigan Gov. Rick Snyder signed off on Detroit’s bankruptcy on July 18, calling it the only “feasible path” for a city whose population has plummeted to 700,000 from 1.8 million decades ago. Detroit’s $18 billion in long-term debt has become an urban millstone.
Residents “are not getting the services they deserve and they haven’t for a very long time,” Snyder said Sunday. “So this can has been getting kicked down the road for decades. Enough is enough and now’s the time to turn it around.”
In March, Snyder appointed a bankruptcy expert, Kevyn Orr, as Detroit’s emergency manager. Orr had sweeping powers to reshape city finances but recommended bankruptcy to the governor after failing to reach any significant deals with creditors, including Wall Street bankers and Detroit pension funds. Many of those creditors, however, accused him of being inflexible and believe bankruptcy always was the plan.
Detroit has more than double the population of Stockton, Calif., which had been the largest U.S. city to file for bankruptcy before Detroit trumped it last week.
Pensioners are anxious. Retired police officer K.D. Bullock, 70, gets a monthly benefit of $2,400. He’s worried about that check getting smaller in bankruptcy and wonders if he’ll have to sell his home in the historic Indian Village neighborhood, one of Detroit’s most stable areas.
“It just means our lifestyle is going to change — we have no way of knowing,” Bullock said.