It Begins: Detroit Neighboring City Of Hamtramck Asks For Permission To File For Bankruptcy
by Tyler Durden
From Detroit News:
The city of Hamtramck, desperate for cash, has asked the state for permission to take an unprecedented step: filing for bankruptcy. City Manager Bill Cooper said the city of roughly 20,000 people is staring at a $3 million deficit, fueled by a dispute with Detroit. Unless Hamtramck files for bankruptcy, it won’t be able to pay its nearly 100 employees or 153 retirees, he said.
The city sent a letter to the state Department of Treasury last week asking for approval to seek bankruptcy protection. It has not received a reply, Cooper said.
“I’m going to run out of money Jan. 31,” Cooper said. Bankruptcy would allow the city wants to stave off creditors and force its unions to consider concessions.
Many Michigan municipalities are under severe financial pressure following a crippling recession that has seen tax revenues plummet. The Detroit Public Schools considered bankruptcy last year but opted against it.
“I’d much rather find another way,” Cooper said. “It’s not Option 1.”
A spokesman for the Department of Treasury said, under state law, a municipality can’t file for bankruptcy without first having an emergency financial manager appointed.