Thursday, August 11

Federal Government Rejects Detroit’s Bankruptcy Plan

On Monday, May 12, the U.S. government filed an objection to Detroit’s debt restructuring plan for dealing with its $18 billion of debt and exiting the largest municipal bankruptcy in U.S. history, according to a May 13 Reuters article.

According to the article, the federal government’s filing addressed several different disputes, both regulatory and monetary, regarding the Michigan metropolis’ adjustment plan. For example, while the Environmental Protection Agency sought assurance that Detroit would adhere to its regulations in its plan, the city had failed to specifically state it would in its adjustment plan.

The federal government joins several other governmental entities that have filed objections to Detroit’s plan, including neighboring Oakland, Wayne and Macomb counties, which rely on Detroit’s water and sewage services, Reuters reported.

“The city appears willing to engage in a game of chance, jeopardizing the (water and sewer department), and thus the region, by putting the (department’s) operations at risk. It does so by, among other things, stripping necessary funds from the water and sewer system at the expense of a healthy (department),” Oakland county stated in its objection.

The federal government’s objection to Detroit’s bankruptcy exit plan has a variety of implications for the city.

According to PressTV, 15 objections total were filed against the city’s readjustment plan Monday. Those who filed objections range from the aforementioned federal government to creditors and individuals to whom Detroit owes money.

Detroit’s plan to reduce its amount of debt will be addressed at a U.S. Bankruptcy Court confirmation hearing beginning in July. Currently, the city also struggles with a number of other pressing issues, such as rampant crime, poor city services and infrastructure and approximately 78,000 abandoned buildings, PressTV wrote.

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