PROJECT M
 

Detroit: from boom to bust to literary fame

As officials struggle to pay pensions, the city's ruins become the backdrop of crime novels and movies

Jobst Leikeb
© Getty Images

Detroit: from boom to bust to literary fame

As officials struggle to pay pensions, the city's ruins become the backdrop of crime novels and movies

Jobst Leikeb

Chapter nine bankruptcy

According to chapter nine of the US federal bankruptcy code, a municipal debtor must provide a plan of debt adjustment that details cuts to creditors. The plan is confirmed or rejected by a bankruptcy judge. To confirm the plan the judge needs to deem it “in the best interest of creditors” and “feasible”. Under chapter nine, “the best interest of creditors” is measured against the hypothetical outcome of an uncoordinated non-bankruptcy foreclosure. In other words, the plan’s confirmation must result in a better outcome for creditors than its rejection. “Feasible” means that the municipality must be able to make the promised payments under the plan and still offer public services at an appropriate level. Additionally, at least one impaired creditor (class) must have agreed to the plan. The judge may then impose the plan on dissenting creditors if he deems it fair, equitable and not unfairly discriminating. This means unsecured creditors are not all treated equally.

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