Despite their many financial challenges, local governments rarely seek solutions in bankruptcy court. In fact, there have been approximately 640 municipal bankruptcies in the U.S. since 1937, when the current law was enacted. As a result, the bankruptcy of the City of Detroit — once the nation’s fourth largest City and symbol of U.S. industrial might, was more than unusual. It was shocking.
How could the home of the mighty American automobile industry fail?
Astounding as the bankruptcy was, its reasons were apparent and long in coming. Detroit’s economic, social and political underpinnings had been eroding for decades, and a combination of bad luck, bad decisions and few viable short-term alternatives drove the City to the brink.
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