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Detroit is broke. Dead broke. The Motor City has been hit hard by the economic downturn, and filed for Chapter 9 bankruptcy protection Thursday (July 18).

Populated by more than 500,000, the “D” is billions in debt.

From the Detroit Free Press:

The filing begins a 30- to 90-day period that will determine whether the city is eligible for Chapter 9 protection and define how many claimants might compete for the limited settlement resources that Detroit has to offer. The bankruptcy petition would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.

“The fiscal realities confronting Detroit have been ignored for too long. I’m making this tough decision so the people of Detroit will have the basic services they deserve and so we can start to put Detroit on a solid financial footing that will allow it to grow and prosper in the future,” said Gov. Rick Snyder. “This is a difficult step, but the only viable option to address a problem that has been six decades in the making.”

Detroit emergency manager Kevyn Orr, who in June released a plan to restructure the city’s debt and obligations that would leave many creditors with much less than they are owed, had warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection.

As it stands, Detroit is the largest American city to resort to such a filing. In court documents Gov. Rick Snyder called the move “the only reasonable alternative that is available.”

Photo: Eric Seals, Detroit Free Press

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