After months of trying to initiate controversial plans that would help keep the Motor City out of bankruptcy, the Detroit Free Press reported on Thursday that the city could file for Chapter 9 bankruptcy as early as Friday morning. This will be the biggest municipal bankruptcy in U.S. history.
After the paperwork has been signed by Michigan Governor Rick Snyder and filed, there will be a 30-to 90-day waiting period to determine whether Detroit is eligible for the benefits allowed to municipalities claiming bankruptcy.
Chapter 9 would allow Detroit's government to renegotiate paying their debt as well as re-write collective bargaining laws, pension packages, and other public expenditures that are deemed unsustainable in the municipalities current economic situation. According to the Free Press, this worries some of the 700,000 people who live in Detroit, especially the 30,000 retired city employees that depend on government pensions.
There is no official confirmation that the city plans to file for bankruptcy yet. THe emergency manager for Detroit, Kevyn Orr, just released a plan last month that attempted to restructure the city's debt and pay less to creditors in order to avoid bankruptcy.