DETROIT (WWJ) -- A federal judge has officially closed Detroit's Chapter 9 bankruptcy case -- ending more than 13 years of court oversight.
The final decree comes as the city makes its last $10 million distribution to unsecured creditors.
In a news release Wednesday, Detroit Mayor Mary Sheffield praised the city's financial turnaround, highlighting 12 consecutive balanced budgets and a return to an investment-grade credit rating.
“I want to thank our financial and legal teams for their hard work making this day possible. Detroit continues to show that it has its financial house in order and in fact has become a model city for effective and responsible fiscal management,” Mayor Sheffield said, citing the city’s 12 consecutive balanced budgets and surpluses, reserve funds totaling more than $500 million and a return to investment grade status among creditors.
“I would be remiss if I didn't acknowledge the critical role the sacrifices of our retirees played in the city’s ability to emerge from bankruptcy and embark upon the road to recover. We owe them a great debt of gratitude,” Sheffield added.
On July 18, 2013, Detroit became the largest city in U.S. history to file for Chapter 9 bankruptcy, burdened by an estimated $18 billion to $20 billion in debt.
The crisis followed decades of severe population decline, a shrinking tax base, and financial mismanagement that left the city unable to fund basic public services.
The filing was initiated by state-appointed Emergency Manager Kevyn Orr after negotiations with creditors, unions, and pension boards stalled.
The city exited active bankruptcy in late 2014 under a court-approved restructuring plan that shed $7 billion in liabilities
. A key element was the $816 million "Grand Bargain," which utilized private and state funds to protect the Detroit Institute of Arts collection while minimizing cuts to city pensions. The subsequent years of federal court oversight ensured Detroit maintained strict fiscal discipline and adhered to its court-mandated financial obligations.
In all, the bankruptcy process allowed the city to shed approximately $7 billion in debt and to restructure another $3 billion in debt, according to the city, freeing up about $150 million per year to spend on city services.
“The closure represents the last step in a journey that has required discipline and sacrifice," said Chief Financial Officer Tanya Stoudemire. We are signaling to the world that Detroit is once again a self-sustaining city with the financial maturity to manage its own future. Our team remains focused on the rigorous, long-term fiscal management necessary to protect our retirees and ensure our residents never face this kind of financial uncertainty again."
