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Friday, November 7, 2014

Detroit Bankruptcy Plan Approved By Judge

An abandoned home is seen with the Detroit skyline in the background on September 5, 2013 in Detroit, Michigan. Detroit is struggling with over 78,000 abandoned homes across 140 square miles and 16% unemployment; in July, the city declared bankruptcy. (Andrew Burton/Getty Images)

An abandoned home is seen with the Detroit skyline in the background on September 5, 2013 in Detroit, Michigan. (Andrew Burton/Getty Images)

A judge has approved Detroit’s plan to get out of bankruptcy by cutting pensions, erasing billions of dollars of debt and promising nearly $2 billion in better services for a city desperate for a turnaround.

Detroit’s exit from the largest public filing in U.S. history took less than 16 months, lightning-fast by bankruptcy standards. The success is largely due to a series of deals between the city and major creditors, especially general retirees who agreed to accept smaller pension checks.

Judge Steven Rhodes found the overall plan is fair and feasible, a key threshold in bankruptcy law. He announced his decision Friday.

No significant critics were left at the end of trial last week. Bond insurers with more than $1 billion at stake settled for much less.

Law professor and bankruptcy expert John Pottow of the University of Michigan Law School joins Here & Now’s Sacha Pfeiffer to discuss the judge’s ruling, the bankruptcy plan and the challenges that lie ahead for Detroit.

Guest

  • John Pottow, law professor at the University of Michigan Law School and an expert in the field of bankruptcy.

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