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Judge Steven Rhodes ruled that Detroit can proceed with Chapter 9 bankruptcy as the city is billions in debt.
According to The Associated Press, the judge ruled only that Detroit can continue towards solving the $18 billion in long-term liabilities that plague the poorly managed city, but no actual plan has been approved. The city merely met conditions under federal law that would allow it to file for bankruptcy.
Unions, retirees and those with pension funds were at the ruling and were not happy with the ruling as they could be losers in any Chapter 9 plan Detroit were to come up with.
Detroit claimed that bankruptcy was needed to help residents dealing with inconsistent services, like trash service.
"This once proud and prosperous city can't pay its debts. It's insolvent. It's eligible for bankruptcy," Rhodes said. "At the same time, it also has an opportunity for a fresh start."
The city opted to go in the rare direction of bankruptcy in July, reports The New York Times. Kevyn Orr, emergency manager, said that part of the $18 billion in debt was $3.5 billion in pension obligations the city cannot afford.
Retiree and public union lawyers have declared they intend to appeal the ruling. Protestors gathered outside of the federal courthouse before the ruling.
image: Wikimedia Commons