Friday, May 9, 2014

Al Jazeera America investigates overlooked stories of Detroit's creditors

Posted By on Fri, May 9, 2014 at 10:24 AM

click to enlarge 512px-headquarters_of_gm_in_detroitjpg

(Source: Wikimedia Commons)

One unique aspect of bankruptcy is how, upon filing, all lawsuits against the debtor immediately stop. In Detroit's case, after filing for Chapter 9 bankruptcy last summer, more than 500 lawsuits filed by ordinary people came to a halt. As Al Jazeera America notes today, the affect of this in a few particular instances is huge.

Like pensioners and bondholders, these tort claimants are unsecured creditors who can walk away from the bankruptcy with only a small fraction of what they are owed as the city seeks to resolve its mammoth debt. But unlike pensioners and bondholders, they have been excluded from the process, given no seat at the table in the high-stakes negotiations over Detroit's bankruptcy or the plan that has them taking a staggering 80 percent cut.

It's well worth a full read and shows an under-reported side to Detroit's historic bankruptcy.

More by Ryan Felton

Best Things to Do In Detroit

Newsletters

Never miss a beat

Sign Up Now

Subscribe now to get the latest news delivered right to your inbox.