WASHINGTON, July 18 (RIA Novosti) – Detroit, once the mighty capital of US car industry, filed Thursday for bankruptcy, following decades of poor management, dwindling population and corruption.
The Chapter 9 bankruptcy protection was filed by Emergency Manager Kevyn Orr and approved by Rick Snyder, governor of the State of Michigan, where Detroit is located.
Detroit, with the population of 700,000, becomes the largest city to file for bankruptcy in the US history.
"This is a difficult step, but the only viable option to address a problem that has been six decades in the making," Snyder told reporters at a brief news conference.
The bankruptcy has become inevitable after the city authorities failed to negotiate the restructuring plan, proposed by Orr in June, with two major pension funds. The plan envisioned significant slashing of retiree benefits to keep the city running.
Detroit faces liabilities of over $18 billion, according to local authorities. The city saw its population decline from 2 million in the 1950s to slightly over 700,000 today. Most of its public services are nearing collapse.
The city also has the highest violent crime rate of any major US city, with 15,245 reported incidents in 2011, according to official statistics.
It may take a federal bankruptcy court up to 90 days to decide whether the city is eligible for Chapter 9 protection.
Meanwhile, the three major US automakers – General Motors, Chrysler and Ford Motor – have said that the bankruptcy declaration will not affect their operation and they are ready "to play a positive role" in Detroit’s revitalization.
