A judge today approved Detroit's plan to get out of bankruptcy, ending the largest public filing in US history. The move launches the city into a turnaround that will require discipline after years of corruption, budget-busting debt, and an exodus of residents. Detroit is cutting the pensions of general retirees by 4.5%, erasing $7 billion of debt, and promising to spend $1.7 billion to demolish scores of dead buildings, improve public safety, and upgrade basic services, among other key steps.
The case concluded in just under 16 months, lightning speed by bankruptcy standards. The success was largely due to a series of deals between Detroit and major creditors, especially retirees who agreed to accept smaller pension checks after the judge said they had no protection under the Michigan Constitution. No significant critics were left by early October. Bond insurers with more than $1 billion at stake repeatedly argued for the sale of valuable art but dropped that plea and settled for much less. (Read more Detroit stories.)