Detroit won approval of a debt-cutting plan that backers say will allow the one-time hub of the U.S. auto industry to exit its record $18 billion municipal bankruptcy and rebuild after decades of population decline and industrial decay.
Saying the bankruptcy process is designed to help cities solve problems they “cannot solve by themselves,” U.S. Bankruptcy Judge Steven Rhodes announced in court Friday that he would confirm the plan, which does away with $7 billion in debt.
Detroit has enlisted charities, creditors and billionaires such as Quicken Loans Inc. founder Dan Gilbert to help rebuild the blighted city and sustain a beleaguered pension system.
The city filed for creditor protection in July 2013, after Michigan passed laws permitting the appointment of an emergency financial manager to tackle its financial woes. It has since looked for ways to pay for everything from new streetlights to ambulances, while cleaning up blighted neighborhoods in a community whose population has dropped to less than 700,000 from a peak of 1.85 million in the 1950s.
Rhodes ruled after a two-month trial on the fairness and feasibility of the plan, during which he heard from investment bankers, a court-appointed financial expert, the mayor and city workers.
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