Federalism Form and Function in the Detroit Bankruptcy

Abstract

On July 18, 2013, at 4:06 p.m. Eastern Time, the City of Detroit entered bankruptcy without a friend in the world. Its restructuring plan had no creditor support. Unlike for General Motors and Chrysler just a few years earlier, no government bailout was on the horizon. Sidelined by a controversial state financial emergency law, Detroit's residents and elected officials deemed the bankruptcy illegitimate. Unions, retiree groups, and the city's pension funds were fighting in state court to block cuts they feared would come from a city bankruptcy.