Published Online: August 11, 2009
Published in Print: August 12, 2009, as Detroit Official Soothes Bankruptcy Speculation

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Detroit Official Soothes Bankruptcy Speculation

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The Detroit public school system’s emergency financial manager moved last week to cool concerns that the cash-strapped district may be rapidly headed toward bankruptcy.

Robert C. Bobb had announced last month that his office had met with lawyers and a former federal judge to debate the merits of Chapter 9 bankruptcy to help bail out the district. But at an Aug. 7 event, Mr. Bobb said he is not sure whether bankruptcy “is the best course of action” for the district, which faces a deficit of at least $259 million and an enrollment that has plummeted below 100,000.

Chapter 9 allows government units to restructure debt and potentially even contracts. But Mr. Bobb said the district already has worked with most of its creditors to slash more than $3 million in debt. The Detroit Federation of Teachers, an affiliate of the American Federation of Teachers, has adamantly opposed bankruptcy. ("Decline and Fall," this issue.)

Vol. 28, Issue 37, Page 4

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