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Detroit Public Schools Consider Filing for Bankruptcy
July 9, 2009
Because of a massive multi-year deficit, the Detroit Public Schools are considering the possibility of filing for bankruptcy. The district faces a deficit of $259.5 million after seven years of overspending. Despite cutbacks, including the closure of 29 schools, nearly 2,500 layoffs and the elimination of funding to the Detroit Children’s Museum, the district is still facing a bleak future.
If the decision to file for bankruptcy is made, the school district will file for a Chapter 9. This is a rarely used form of bankruptcy, which can be utilized only by municipal entities. It will allow the district to renegotiate some of its debt. The officials in the district are currently meeting to discuss the pros and cons of such a decision. It is expected to be reached in the coming months, or possibly even weeks, to deal with the severity of the situation.