Detroit Offers Plan to Crawl Out of Bankruptcy

The roadmap includes cuts to pensions and creditors to reduce the city’s $18 billion in debt

  • Share
  • Read Later

Like TIME on Facebook for more breaking news and current events from around the globe!

Joshua Lott / Reuters

A man uses his cane to navigate a snow covered road in Detroit, January 2, 2014.

Detroit revealed its plan Friday to find its way out of the largest municipal bankruptcy in American history by cutting pensions and slashing payments to creditors while making small investments in city services.

The announcement marks a major step in Detroit’s effort to come out from under an estimated $18 billion in debt.

At the heart of the plan proposed by Detroit’s state-appointed emergency manager, are a 34 percent cut to the pensions of general city retirees and a 10 percent cut to police and fire retirees, plus cuts to bondholder payments, the Detroit Free Press reports. The city of 700,000 will also invest $1.5 billion over 10 years in city services, like the police force, and a plan to dramatically ramp up its demolition of abandoned homes from 114 a week today to about 450 a week.

Most of the particulars of the plan are still being negotiated with stakeholders and court challenges are likely before any final bankruptcy comeback plan is put into action.

[The Detroit Free Press]