Saved! Detroit Approved to Set Bankruptcy Plan in Action

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.

The plan comes with sacrifices. Creditors took a buzz cut: general retirees agreed to a 4.5 percent 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. The case went through the courts faster than many had thought for something so massive and complex. It took only 16 months as the city's financial officials, led by emergency manager Kevyn Orr, cut deals with major stakeholders including creditors, retirees, unions, bond insurers and banks. The proceedings could prove to be a blueprint for future Chapter 9 bankruptcies, which have tended to be long and winding roads. In the process, the deal saved the Detroit Institute of Arts, one of the city's jewels, from having to sell off its collection, valued by Christie's auction house at $867 million.

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First published November 7 2014, 4:32 AM

Patrick J. Rizzo

Patrick Rizzo is the business editor for NBC News Digital. He started this role in November of 2008. Rizzo is responsible for NBC News’ coverage of the economy and business.Rizzo joined NBCNews.com from , where he was economics editor. In that role, Rizzo was responsible for the AP’s coverage of the economy, particularly the dual U.S. housing and financial crisis and the Great Recession.Prior to The AP, Rizzo was at Reuters, where he spent 18 years covering a wide range of general news and business stories.Rizzo lives in New York City, with his wife Kathryn Lu and his two children, Dylan and Alessandra.

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