A judge has approved Detroit's plan to get out of bankruptcy by cutting pensions, erasing billions of dollars of debt and promising nearly $2 billion in better services for a city desperate for a turnaround.
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Detroit's exit from the largest public filing in U.S. history took less than 16 months, lightning-fast by bankruptcy standards. The success is largely due to a series of deals between the city and major creditors, especially general retirees who agreed to accept smaller pension checks.
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Judge Steven Rhodes found the overall plan is fair and feasible, a key threshold in bankruptcy law. He announced his decision Friday.
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No significant critics were left at the end of trial last week. Bond insurers with more than $1 billion at stake settled for much less.
The most unusual feature is an $816 million pot of money funded by the state, foundations, philanthropists and The Detroit Institute of Arts. The money would patch holes in pension funds, prevent even deeper cuts to retirees and avert the sale of city-owned art at the world-class museum.
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It took more than two years for a smaller city, Stockton, California, to get out of bankruptcy. San Bernardino, a California city even smaller than Stockton, still is operating under Chapter 9 protection more than two years after filing. (AP)
