DETROIT (WWJ) – After years of hand wringing over the state of affairs in the rust belt hub that has struggled in recent years perhaps more than any other large city in America, it’s official: Detroit has filed for Chapter 9 bankruptcy protection.

Motown, the gritty place that pioneered automobiles, modern manufacturing and soul music, now has the largest municipal bankruptcy case in U.S. history.

The 16-page filing was submitted to federal U.S. Bankruptcy Court Thursday afternoon with no announcement from the city or state.

Detroit has been struggling, crushed under billions of dollars in debt following decades of mismanagement, population flight and loss of tax revenue. The city lost a quarter-million residents between 2000 and 2010. Detroit now has an estimated 700,000 residents; down from 1.8 million in the 1950s.

No Federal Government Bailout In The Works For Detroit

For weeks, emergency manager Kevyn Orr has been working to try to lower the city’s debt as he slashes budgets, works with unions, and make sense of Detroit’s disjointed financial records.

A city official notably said the federal government should bail out Detroit, though the president has made no indication that’s a possibility.

Orr’s options were these: File for bankruptcy or cut the biggest bond restructuring deal of all time.

The latter didn’t happen.

Said Orr, in a written recommendation hand-delivered Tuesday to Gov. Rick Snyder and state Treasurer Andy Dillon:

“Based on the current facts and circumstances, I have concluded that no reasonable alternative to rectifying the city’s financial emergency exists other than the confirmation of a plan of adjustment for the city’s debts pursuant to chapter 9 of the bankruptcy code because the city cannot adopt a feasible financial plan that cant satisfactorily rectify the financial emergency outside of a chapter 9 process in a timely manner.” [View a copy of Orr’s letter].

Gov. Snyder on Thursday approved the bankruptcy

“Only one feasible path offers a way out,” Snyder wrote in a letter to Dillon and Orr.

“The citizens of Detroit need and deserve a clear road out of the cycle of ever-decreasing services,” Snyder said. “The city’s creditors, as well as its many dedicated public servants, deserve to know what promises the city can and will keep. The only way to do those things is to radically restructure the city and allow it to reinvent itself without the burden of impossible obligations.”

“Despite Mr. Orr’s best efforts, he has been unable to reach a restructuring plan with the city’s creditors,” Snyder said. “I therefore agree that the only feasible path to a stable and solid Detroit is to file for bankruptcy protection.” [View a copy of the letter].

According to sources talking to WWJ City Beat Reporter Vickie Thomas, city officials were preparing the filing earlier Thursday. Federal Court spokesman Ron Hansen confirmed the filing shortly after 4 p.m.

Meantime, one mayoral candidate says Orr’s numbers are not adding up.

Krystal Crittendon, an attorney for the city, is criticizing the math in Orr’s latest financial report. She said the Washington-based bankruptcy attorney’s numbers do not add up.

“The whole foundation that brings him here is false,” Crittendon said. “We do not have a $15 [billion] or a $20 billion debt problem. We have less than a $2 billion short-term debt problem that we could manage if we just went out and collected revenues that are owed to the city; stop giving, you know, tax abatement to people who can actually afford to pay taxes.”

Orr was hired by the state in March after a financial emergency was declared in Detroit.

Following a meeting last month with Wall Street creditors, Orr estimated Detroit’s budget deficit at $380 million, and the city’s long-term debt at $20 billion. Creditors are being asked to take about 10 cents on the dollar of what’s owed to them. [VIEW THE PROPOSAL HERE]

At that time, Orr gave the city a 50-50 chance of avoiding bankruptcy.

Bankruptcy expert Douglas Bernstein, with West Bloomfield’s Plunkett Cooney Law Firm, said the filing will kick-start a multi-month period where a federal judge and consultants would determine whether Detroit is eligible for Chapter 9 protection.

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