News in Brief
Detroit Official Soothes Bankruptcy Speculation
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 4Published in Print: August 12, 2009, as Detroit Official Soothes Bankruptcy Speculation