Judge Steven Rhodes rules Detroit eligible for Chapter 9 Bankrutpcy filing

DETROIT (WXYZ) - Judge Steven Rhodes has ruled that Detroit is eligible for bankruptcy, making it the largest municipality in US history to enter Chapter 9 Bankruptcy.

The judge's decision came down around 11:30 a.m. Tuesday, about an hour and half after the court proceedings began.


"This is indeed a momentous day... this once proud city can't pay its debts... it's insolvent. However, at the same time, it's eligible for a fresh start," said Rhodes.

He also gave his opinion on the timing of the filing, "Detroit could have and should have filed for bankruptcy long before it did... perhaps years before."

The next step will be for the city to provide a reorganization plan to spell out the hit creditors will take. That includes more than 20,000 Detroit city retirees facing reductions in their pensions and health care coverage from the city.

Rhodes said pensions can be cut but also added that he won't approve changes to pensions unless the city's plan is "fair and equitable."

He also addressed the claim that the state law that put Emergency Manager Kevyn Orr in place is unconstitutional.

"The governor's authorization to file this bankruptcy case... was valid under the Michigan constitution," said Rhodes.

The Detroit Institute of Art responded to the bankruptcy eligibility ruling and the role, if any, the artwork might play.

Rhodes' ruling came two weeks after a nine day trial that covered whether Detroit's Emergency Manager and his team negotiated in good faith with creditors. 

Appeals have already been filed by AFSCME.

Hundreds of media from around the world are in Detroit to cover this milestone in the city's history.  Also dozens of protesters including retirees are picketing in front of the federal courthouse.

The city of Detroit has a long-term deficit of $18 billion.

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