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Detroit is trying to expedite its bankruptcy

Any person may find him- or herself needing to file for bankruptcy for various reasons. In a tough business environment many business must also need to reorganize or liquidate assets.

Increasingly, cities are also becoming insolvent. The most recent, and the largest city to ever file is Detroit. The city is planning to complete its Chapter 9 bankruptcy by September of 2014. The city is attempted to fast-track the process, which can take several years.

The city is looking to mimic the General Motors and Chryler commercial bankruptcies of 2009. The automakers avoided many legal hurdles, such as the requirement that Chrysler had to vet potential buyers, and completed their bankruptcies in weeks.

Of course, the circumstances are not completely the same. For example, the auto companies received federal money to help resolve their bankruptcies. But many legal tactics may be used to speed up the timeframe. For example, the city is asking to avoid having to prove that it needs to file for bankruptcies, citing the city's long and public economic struggles.

Like any business bankruptcy, the city is seeking to avoid lengthy bankruptcies to avoid protracted legal fees and to obtain sounder financial footing for the benefit of Detroit's residents. Among the many questions Detroit's filing poses is whether city employees will have their pension plans and whether the city's bondholders will receive secured or unsecured status. Questions such as these could potentially delay proceedings.

Business in Detroit and surrounding areas who find themselves in a similar financial situation to that of the city itself should contact a bankruptcy attorney experienced with commercial bankruptcy.

Source: USA Today, "Detroit Bankruptcy: How fast will it go?," Jerry Mosemak, July 22, 2013

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