GM headquarters in the city of Detroit, Michigan (USA)
The Detroit creditors would receive only a very small part. Director of Emergency Response Council of the city - he Kevyn Orr said: "The weak financial management, population is declining, tax revenues decline and many other factors in the past 45 years has led Detroit stands the risk of insolvency. "
Last week, he met the largest creditor of the city to present restructuring plans preliminary. Orr said he would hold further meetings with city unions. In the statement and restructuring plan 134 pages long, he does not mention the word "bankruptcy". However, everyone understands this risk is very close.
Orr said he wanted to help the city avoid a default, but can not eliminate this risk. If this happens, Detroit would be the largest U.S. city bankruptcy, since the work of Cleveland in 1978.
Attorney Michael Sweet, an expert in the field of local defaults on the outcome says Detroit is inevitable. Sweet said: "Mr Orr's meeting with the creditors to increase willingness to negotiate only. Though reputation insolvency Detroit will decline more or less, this is their chance to reform" .
Orr was called for cutting $ 11.5 billion unsecured debts - including pension, health care funds and loans secured by the property to $ 2 billion. This restructuring plan has received the consent of the Governor of Michigan - Rick Snyder.
However, many people gathered outside the venue to protest the meeting. David Sole, a drainage worker retired, said: "We will have to live without how this pension?".
In recent years, Detroit fell into financial difficulties as the major industry in the U.S. auto market decline. The city government continues to borrow more debt while not cutting spending.
Detroit's population has dropped by 28% since 2000. The unemployment rate is also high at 18.6%, despite reduced by 23.4% relative to the previous three years. Detroit was the center of the world automobile manufacturers and the headquarters of the giant General Motors.
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