The largest municipal bankruptcy in U.S. history is ending. Federal Judge Steven Rhodes on Friday confirmed Detroit’s plan to emerge from Chapter 9 bankruptcy, allowing the city to crawl out from under a $7 billion mountain of debt and setting it on a course to try to revive its financial fortunes.
Judge Rhodes approved the historic plan to a hushed courtroom shortly after 1 p.m. ET. "The court confirms the plan," he told an audience that included city officials, creditors and other onlookers.
The plan comes with sacrifices. Creditors took a buzz cut: general retirees agreed to a 4.5% cut in pensions and to forego cost-of-living increases; and two major bond insurers dropped their objections after the city offered them cash and real estate. The city, which has seen its population drop by more than half since 1950, could emerge from bankruptcy within weeks. Detroit is earmarking $1.7 billion over 10 years to improve services for its citizens. It will tear down scores of blighted buildings, upgrade basic services and increase public safety as a lure to attract people and businesses.
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