Detroit, Michigan bankruptcy, 2013

On July 18, 2013, Detroit emergency manager Kevyn Orr decided to file for bankruptcy for the city, making it the largest U.S. city to file for bankruptcy protection. Snyder, who early in his term pressed for increasing the state's ability to intervene in cities and schools that were under severe financial pressure, approved of the move, saying, "We looked through every other viable option."

Snyder had previously stated since his election that the city would not go into bankruptcy. Just two days before the announcement was made, Snyder said, "The goal is not to be in bankruptcy." In the end, however, Snyder summed up the issue, saying, "Here was a problem 60 years in the making. The can was being kicked down the road for far too long. It was time to say enough was enough. Let's stop, let's stabilize, let's grow."

Snyder vetoed the possibility of a federal bailout of Detroit, stating, "The state nor the federal government should just simply write checks to take care of liabilities. I haven't asked and I don't intend to ask."

The creation of the emergency manager law was a contentious one that led in part to two unsuccessful attempts to recall Snyder from office. The original legislation, signed into law by Snyder on March 17, 2011, was repealed by voters in a referendum on November 6, 2012. Lawmakers quickly passed a revised version of the law, which Snyder signed in late December. Snyder then appointed Orr as Detroit's emergency manager in March 2013.

Following the bankruptcy declaration, emails between the Snyder administration, Kevyn Orr, and Orr's law firm, Jones Day, emerged, showing bankruptcy was considered as early as January 2013. In an exchange on January 31, Jones Day lawyer Dan Moss told Orr, "It seems that the ideal scenario would be that Snyder and (Mayor Dave) Bing both agree that the best option is simply to go through an orderly Chapter 9. This avoids an unnecessary political fight over the scope/authority of any appointed emergency manager and, moreover, moves the ball forward on setting Detroit on the right track.” Critics argued that the emails show bankruptcy was the plan all along, while administration officials said the process was transparent and that all options were considered.

Snyder and Orr traveled to New York to try to sell investors on Detroit, calling Michigan the comeback state. "Detroit was a place where the last obstacle was a city government issue of debt and services," Snyder said, going on to say, "We're not just trying to shed debt. We're actually trying to make the city infrastructure — blight remediation, health, safety and welfare — better to attract people in."

A poll released by bipartisan consulting firm Lambert, Edwards & Associates on July 31 showed Snyder with a 44 percent favorable rating, an increase from before the bankruptcy. 43 percent of those polled said they would re-elect him.

On September 10, 2013, Snyder's attorneys said the governor agreed to be questioned by union lawyers about the decision to file for bankruptcy, something that he and other state officials had been resisting, claiming executive privilege. Snyder's deposition was behind closed doors and limited to three hours.

In late September, the Obama administration announced it was pledging nearly $300 million to Detroit for basic infrastructure priorities. $100 million of the money is for blight eradication, with about $30 million for the regional transit network and the rest going towards various projects including Police Department training and anti-violence programs.

A federal court approved the end of Detroit's Chapter 9 bankruptcy status on November 7, 2014. Judge Steven W. Rhodes indicated that the city's restructuring efforts were sufficient to warrant exiting bankruptcy, with 74 percent of unsecured debts set to leave the city's books. Orr tendered his resignation as emergency manager in early December 2014, following Snyder's decision to approve an end to state receivership.

See also

• Detroit, Michigan