On July 18, 2013 the city of Detroit announced it was filing for "chapter 9" bankruptcy. While city bankruptcies are fairly rare, they are not unknown. Since 2010 there have been more than 20 U.S. city, county and "special districts" that have declared chapter 9 bankruptcy. However, thus far, Detroit's is by far the largest, with more than $18 billion in outstanding debts. Detroit's bankruptcy will of course have an impact on the people of Detroit, and puts something of black eye on the city. Although the bankruptcy may actually benefit certain sectors of business in and around Detroit, it will also create heightened uncertainties for residents, and especially city employees and retirees.
David A. Pace, CFA
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