The Bankruptcy of Detroit
Contents
The Definition of Bankruptcy
General Definition of Bankruptcy
Bankruptcy is a legal process for a person or organizations, which have no ability to afford their outstanding debts. The precondition of the bankruptcy process is debtor or represent creditors propose a petition in bankruptcy. Bankruptcy petition is not the beginning of bankruptcy process, but that is important to bring bankruptcy to the court and move into legal process. After that, the court will negotiate with debtors, measure and evaluate all assets of debtors, therefore, these assets used to repay as a portion of their outstanding debt. When the bankruptcy process completed successfully, the debtors have no obligation to response for that debt. (“Bankruptcy,” 2014)
Bankruptcy provides an opportunity for an individual or organization to relieve debt and start over. From a creditor’s view, bankruptcy can help them cut their losses. Though this process both debtors and creditors gain chances to rethink the development strategy of business.
The Bankruptcy of Detroit
In year 2013, Detroit filed for Chapter 9, Title 11 of the United State Code, which is a chapter of the United States Bankruptcy Code. The code is available exclusively to municipalities that assist debtors in the restructuring of debts. There is no doubt that debt exerts an indispensable role in the bankruptcy of Detroit. (“Chapter 9, Title 11, United States Code,” 2014) Detroit government has an estimated debt about $ 18-20 billion. While, government cannot repay these debts which included revenue bonds, general obligation bonds, pension certificated of participation. Since 1960, pension and health care increasing becomes the significant part of government debt. It also became the biggest bankruptcy case based on population of United State history (Exhibit1.1).
Exhibit 1.1: the difference between the debt in 1960 and 2012 (Bomey & Gallagher, 2013)
Generally speaking, bankruptcy procedure is to help
The Definition of Bankruptcy
General Definition of Bankruptcy
Bankruptcy is a legal process for a person or organizations, which have no ability to afford their outstanding debts. The precondition of the bankruptcy process is debtor or represent creditors propose a petition in bankruptcy. Bankruptcy petition is not the beginning of bankruptcy process, but that is important to bring bankruptcy to the court and move into legal process. After that, the court will negotiate with debtors, measure and evaluate all assets of debtors, therefore, these assets used to repay as a portion of their outstanding debt. When the bankruptcy process completed successfully, the debtors have no obligation to response for that debt. (“Bankruptcy,” 2014)
Bankruptcy provides an opportunity for an individual or organization to relieve debt and start over. From a creditor’s view, bankruptcy can help them cut their losses. Though this process both debtors and creditors gain chances to rethink the development strategy of business.
The Bankruptcy of Detroit
In year 2013, Detroit filed for Chapter 9, Title 11 of the United State Code, which is a chapter of the United States Bankruptcy Code. The code is available exclusively to municipalities that assist debtors in the restructuring of debts. There is no doubt that debt exerts an indispensable role in the bankruptcy of Detroit. (“Chapter 9, Title 11, United States Code,” 2014) Detroit government has an estimated debt about $ 18-20 billion. While, government cannot repay these debts which included revenue bonds, general obligation bonds, pension certificated of participation. Since 1960, pension and health care increasing becomes the significant part of government debt. It also became the biggest bankruptcy case based on population of United State history (Exhibit1.1).
Exhibit 1.1: the difference between the debt in 1960 and 2012 (Bomey & Gallagher, 2013)
Generally speaking, bankruptcy procedure is to help