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City of Detroit Bankruptcy

Full Name
Detroit Bankruptcy
Event Type
Bankruptcy
Location
Detroit
Primary Date
1/1/2013

The 2013 Bankruptcy of Detroit was the largest municipal bankruptcy in the United States.

Asset Classes

Municipal Bond

  • Largest municipal bankruptcy in U.S. history (~18 Billion Dollars in Debt)
  • Bankruptcy judge famously summarized the necessary outcome as: “What will keep Detroit moving?”
  • Pension holders took fewer losses than bondholders
  • Municipal bondholders may not be as well protected as they think they are 
  • Although bondholders technically have priority over other creditors like pensions, the courts may rule in favor of pensioners
  • This precedent is not set for future municipal bankruptcies

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