Updated from 5:23 p.m. ET with commentary and analysis throughout.
NEW YORK ( TheStreet) - Detroit, once the nation's fourth-largest city, has filed for a Chapter 9 bankruptcy after out-of-court restructuring efforts failed on Thursday.
Detroit's filing is the largest municipal bankruptcy in U.S. history and comes just four years after the bankruptcy of some of the city's biggest employers; automakers General Motors and Chrysler. While GM and Chrysler have emerged from bankruptcy stronger than ever and are part of a burgeoning economic recovery in the U.S., Detroit's finances have continued to deteriorate.
Once the saying was "as goes Detroit so goes the nation." Thursday afternoon, as Detroit's filing hit newswires, ratings agency Moody's upgraded its outlook on the credit rating of the United States, a sign of changing times for the city.Kevyn D. Orr, the emergency manager appointed by Michigan governor Rick Snyder, estimated Detroit may have debts of between $18 billion and $20 billion. Both Orr and Snyder approved the bankruptcy filing, which was made in a U.S. Bankruptcy Court in the Eastern District of Michigan. "Detroit's broke," Snyder said in a video posted on YouTube. The governor characterized bankruptcy as a 'fresh start' that will allow the city to restructure its debt load and legacy costs, while working to improve services for its residents. Orr, the city's emergency manager, has forecast that a restructuring could help the city spend about $1.25 billion in restarting critical services and rebuilding fallow infrastructure. "
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