Detroit’s population fell from about 1.8 million in 1950 to roughly 700,000 in 2013, while the city still spanned 139 square miles. More than two-thirds of its businesses closed between 1972 and 2015, revenue dropped over 20 percent from 2008 levels, and in 2011, 47 percent of property owners did not pay property taxes. Despite cutting operating costs 38 percent, the city had borrowed $1.6 billion through certificates of participation for pensions, tied to interest rate swaps whose termination penalties hit after 2008. In March 2013 Governor Rick Snyder appointed Kevin Orr as emergency manager, who found a $162 million cash shortfall, and the city filed the largest municipal bankruptcy in U.S. history, with an estimated $18 to $20 billion in debt.

The next day state judge Rosemarie Aquilina ruled the filing unconstitutional under the Michigan Constitution’s pension protections, but federal bankruptcy judge Steven Rhodes stayed state proceedings and in December 2013 ruled the city eligible, holding that pensions could be cut as contracts. With creditors eyeing the Detroit Institute of Arts’ 66,000 works, mediator Judge Gerald Rosen assembled the Grand Bargain: foundations including Ford, Kresge, Knight and Mott, the state and the museum committed $816 million over 20 years, spun the DIA off as an independent nonprofit and directed the money to pensions. General retiree cuts fell to 4.5 percent. Rhodes approved the plan in November 2014, and Detroit exited bankruptcy in December 2014, 17 months after filing.

• Only about 60 municipal bankruptcies have been filed since 1950.
• The previous record holder, Jefferson County, Alabama, had debt of around $4 billion.
• Orr first offered some creditors settlements as low as 10 percent of what they were owed.
• Creditors absorbed about $7 billion in losses, recovering 14 to 75 cents on the dollar.
• During COVID-19, lost casino revenue opened a new deficit, and Mayor Mike Duggan cut blight removal funding.