Detroit in Largest US Bankruptcy

Trash sits in front of dilapidated houses on Mackay Street in Detroit, Michigan, on Feb. 21, 2013. Photo by Bloomberg

Detroit has become the largest US city ever to file for bankruptcy, with debts of at least USD 15 B.

The city, once a symbol of US industrial power, is seeking protection from creditors who include public-sector workers and their pension funds.

Detroit has faced decades of problems linked to the decline of its industry.

The BBC's Jonny Dymond in Washington says public services are in a state of near collapse and around 70,000 properties lie abandoned.

However, Mayor Dave Bing has vowed that public services will keep running and wages for public workers will be paid.

On Thursday, Michigan state-appointed emergency manager Kevyn Orr asked a federal judge to place the city into bankruptcy protection.

If it is approved, he would be allowed to liquidate city assets to satisfy creditors and pensions.

At a press briefing on Thursday, Kevyn Orr said filing for bankruptcy was the "first step toward restoring the city".

Alongside him, Detroit Mayor Dave Bing said that residents had to make a new start.

"I really didn't want to go in this direction - but now that we are here, we have to make the best of it," Bing said.

The mayor also assured residents that the city would stay open and bills would be paid despite the filing.

"Paychecks for our city employees will continue, services will continue," he said.

In a letter accompanying Thursday's filing, Michigan's Governor Rick Snyder, a Republican, said he had approved the request from Orr to file for Chapter 9 bankruptcy.

"Only one feasible path offers a way out," Gov Snyder said, adding that residents needed a clear exit from the "cycle of ever decreasing services".

"The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.

"It is clear that the financial emergency in Detroit cannot be successfully addressed outside of such a filing, and it is the only reasonable alternative that is available".

Meanwhile, the White House said it was closely monitoring developments in Detroit.

"While leaders on the ground in Michigan and the city's creditors understand that they must find a solution to Detroit's serious financial challenge, we remain committed to continuing our strong partnership with Detroit as it works to recover and revitalise and maintain its status as one of America's great cities," said White House spokeswoman Amy Brundage.

Analysts say there are some concerns that businesses might ditch their operations in Detroit.

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