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Detroit Resurrected: To Bankruptcy and Back
What happens when an iconic American city goes broke? At exactly 4:06 p.m. on July 18, 2013, the city of Detroit filed for bankruptcy. It was the largest municipal bankruptcy in American history―the Motor City had finally hit rock bottom. But what led to that fateful day, and how did the city survive the perilous months that followed? In Detroit Resurrected , Nathan Bomey delivers the inside story of the fight to save Detroit against impossible odds. Bomey, who covered the bankruptcy for the Detroit Free Press , provides a gripping account of the tremendous clash between lawyers, judges, bankers, union leaders, politicians, philanthropists, and the people of Detroit themselves. The battle to rescue this iconic city pulled together those who believed in its future―despite their differences. Help came in the form of Republican governor Rick Snyder, a technocrat who famously called himself “one tough nerd”; emergency manager Kevyn Orr, a sharp-shooting lawyer and “yellow-dog Democrat”; and judges Steven Rhodes and Gerald Rosen, the key architects of the grand bargain that would give the city a second chance at life. Detroit had a long way to go. Facing a legacy of broken promises, the city had to seek unprecedented sacrifices from retirees and union leaders, who fought for their pensions and benefits. It had to confront the consequences of years of municipal corruption while warding off Wall Street bond insurers who demanded their money back. And it had to consider liquidating the Detroit Institute of Arts, whose world-class collection became an object of desire for the city’s numerous creditors. In a tight, suspenseful narrative, Detroit Resurrected reveals the tricky path to rescuing the city from $18 billion in debt and giving new hope to its citizens. Based on hundreds of exclusive interviews, insider sources, and thousands of records, Detroit Resurrected gives a sweeping account of financial ruin, backroom intrigue, and political rebirth in the struggle to reinvent one of America’s iconic cities.
320 pages, Hardcover
Published April 25, 2016
31 people are currently reading
455 people want to read
About the author
Nathan Bomey
3 books15 followersI am a business reporter for Axios and a former reporter for USA Today and the Detroit Free Press.
I've written three nationally published nonfiction books:
—BRIDGE BUILDERS: BRINGING PEOPLE TOGETHER IN A POLARIZED AGE (2021, Polity Press): I set out to meet Americans who are bringing people together despite their differences, whether it's politics, race, religion, class or culture. In the book, I tell their stories and examine what we can learn from them. I used this truly invigorating experience to turn out a solutions-oriented book that illuminates a different path in the face of rigid polarization.
—AFTER THE FACT: THE EROSION OF TRUTH AND THE INEVITABLE RISE OF DONALD TRUMP (2018, Prometheus Books): This nonpartisan book explores the post-fact era brought about by our collective transfer of trust from professional journalists to social media, technology, and ideological groups, enabling Donald Trump to trample the truth en route to the White House.
—DETROIT RESURRECTED: TO BANKRUPTCY AND BACK (2016, W.W. Norton & Co.): This book chronicles the largest Chapter 9 bankruptcy in U.S. history.
I've written three nationally published nonfiction books:
—BRIDGE BUILDERS: BRINGING PEOPLE TOGETHER IN A POLARIZED AGE (2021, Polity Press): I set out to meet Americans who are bringing people together despite their differences, whether it's politics, race, religion, class or culture. In the book, I tell their stories and examine what we can learn from them. I used this truly invigorating experience to turn out a solutions-oriented book that illuminates a different path in the face of rigid polarization.
—AFTER THE FACT: THE EROSION OF TRUTH AND THE INEVITABLE RISE OF DONALD TRUMP (2018, Prometheus Books): This nonpartisan book explores the post-fact era brought about by our collective transfer of trust from professional journalists to social media, technology, and ideological groups, enabling Donald Trump to trample the truth en route to the White House.
—DETROIT RESURRECTED: TO BANKRUPTCY AND BACK (2016, W.W. Norton & Co.): This book chronicles the largest Chapter 9 bankruptcy in U.S. history.
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May 29, 2016
This is a detailed an scrupulously fair narrative around the city of Detroit's bankruptcy negotiations and how it came to settle. Though there are some useful figures included, this book is focused on the interests of major players and how the negotiations played out.
There are only a few numbers here, but they illustrate the miserable condition of the city's finances by 2013. It was not only incapable of paying off its debts, but had reached the point where it could no longer pay for services such as street lighting and many of the residents stopped bothering to pay their taxes. Bomey notes that economic and industrial circumstances had made the city poorer, but mismanagement under Mayor Kilpatrick was forced it into insolvency.
Bomey reconstructs the narrative and gives perspective to all of the parties involved - 'Wall Street' including some major banks and bond-holders based in the Caribbean, but also 'Main Street' in terms of the Detroit Institute of Art, local pensioners, and citizens who needed restoration of services.
Is Detroit back from the dead? I visit the city some times, and I'm encouraged by some signs of progress. The population is no longer in free fall, immigrants are coming back in, and businesses are building new facilities and renovating old ones. The street lights are back on, the fire fighters have more funding. Still, the costs of running the city itself are a massive strain on the diminished tax base, as the horrible condition of the school system clearly shows. The city's resurrection is a long time coming, but a burden of debt - a $7 billion burden - has been shed.
There are only a few numbers here, but they illustrate the miserable condition of the city's finances by 2013. It was not only incapable of paying off its debts, but had reached the point where it could no longer pay for services such as street lighting and many of the residents stopped bothering to pay their taxes. Bomey notes that economic and industrial circumstances had made the city poorer, but mismanagement under Mayor Kilpatrick was forced it into insolvency.
Bomey reconstructs the narrative and gives perspective to all of the parties involved - 'Wall Street' including some major banks and bond-holders based in the Caribbean, but also 'Main Street' in terms of the Detroit Institute of Art, local pensioners, and citizens who needed restoration of services.
Is Detroit back from the dead? I visit the city some times, and I'm encouraged by some signs of progress. The population is no longer in free fall, immigrants are coming back in, and businesses are building new facilities and renovating old ones. The street lights are back on, the fire fighters have more funding. Still, the costs of running the city itself are a massive strain on the diminished tax base, as the horrible condition of the school system clearly shows. The city's resurrection is a long time coming, but a burden of debt - a $7 billion burden - has been shed.
June 7, 2016
Book is a fast read and Bomey had inside access to all the players in the bankruptcy, providing a very insightful look into their motivations and actions during the city's restructuring. If nothing else, I would pick up the book simply for the scuttlebutt from the insiders.
I am a municipal finance professional, so I cannot help but point out a few things:
1) I wish the author spent more time investigating whether the city's post-bankruptcy financial projections were realistic. Judge Rhodes hired Martha Kopacz of Phoenix Management to review city's assumptions of revenue and expenses; she was much less sanguine about Detroit hitting its revenue estimates. This is important because the city needs to have a realistic expectation of what its operating budget will look like, so that officials can plan for contingencies if rose-colored projections do not pan out.
2) One of the underlying causes for Detroit's ailments comes from its footprint - it simply has too much land, given its current population, for government services to be efficiently provided. One of the lawyers in the book mentioned that he tried to tackle the problem by figuring out what the appropriate footprint should be, and build out/reorganize government services after. The book also briefly referenced the Detroit Future City report which proposed converting excess land into parks/public areas. I wish there were more discussion around this point, because it is a fundamental cause of the city's problems - you simply cannot operate with a 1.5 million footprint when the actual population is fewer than 700,000.
3) Pensioners and financial creditors received unequal treatments despite having equal priority under law. It is easy to be sympathetic to pensioners, and like most of us the author was not immune from that. However, I wish he emphasized the equal legal priority/unequal outcome issue, because the treatment of financial creditors by Judge Rhodes and the mediation process has completely set back investors' expectations of contractual law in the State of Michigan. Greater investor skepticism means greater difficulty in securing funding not just from Wall Street, but from employers as well. Sure, Detroit can rebound as businesses seek to take advantage of the fresh start, but they will seek onerous terms from the city to invest in the city, because they have seen the unequal treatment of creditors. The knock-on impact is difficult to quantify but worth discussing because it directly affects Detroit's future, and I wish the book had spent more time on it.
I am a municipal finance professional, so I cannot help but point out a few things:
1) I wish the author spent more time investigating whether the city's post-bankruptcy financial projections were realistic. Judge Rhodes hired Martha Kopacz of Phoenix Management to review city's assumptions of revenue and expenses; she was much less sanguine about Detroit hitting its revenue estimates. This is important because the city needs to have a realistic expectation of what its operating budget will look like, so that officials can plan for contingencies if rose-colored projections do not pan out.
2) One of the underlying causes for Detroit's ailments comes from its footprint - it simply has too much land, given its current population, for government services to be efficiently provided. One of the lawyers in the book mentioned that he tried to tackle the problem by figuring out what the appropriate footprint should be, and build out/reorganize government services after. The book also briefly referenced the Detroit Future City report which proposed converting excess land into parks/public areas. I wish there were more discussion around this point, because it is a fundamental cause of the city's problems - you simply cannot operate with a 1.5 million footprint when the actual population is fewer than 700,000.
3) Pensioners and financial creditors received unequal treatments despite having equal priority under law. It is easy to be sympathetic to pensioners, and like most of us the author was not immune from that. However, I wish he emphasized the equal legal priority/unequal outcome issue, because the treatment of financial creditors by Judge Rhodes and the mediation process has completely set back investors' expectations of contractual law in the State of Michigan. Greater investor skepticism means greater difficulty in securing funding not just from Wall Street, but from employers as well. Sure, Detroit can rebound as businesses seek to take advantage of the fresh start, but they will seek onerous terms from the city to invest in the city, because they have seen the unequal treatment of creditors. The knock-on impact is difficult to quantify but worth discussing because it directly affects Detroit's future, and I wish the book had spent more time on it.
June 16, 2024
4.55/5 stars rounds up to 5! As a business guy, I really enjoyed this book. Especially growing up around Detroit and having ties to turnaround management, it was so special seeing city names or recognizing people that are now marked in history. This book fit perfectly for someone with a familiar understanding of general business. I found myself asking questions and even looking into Detroit’s comparative financials. I was consistently on edge waiting to see what happened next and the results of this.
I am surprised I have such high praise for this book. I found this book because I was just curious if any books had been written on the Detroit bankruptcy. It could’ve been just okay. I wasn’t recommended it and I didn’t see it advertised anywhere. I just happened upon a great read.
I am surprised I have such high praise for this book. I found this book because I was just curious if any books had been written on the Detroit bankruptcy. It could’ve been just okay. I wasn’t recommended it and I didn’t see it advertised anywhere. I just happened upon a great read.
May 26, 2016
3.5 stars
This book was both hard to read and an important read, particularly for me as a native Detroiter. Detroit Resurrected: To Bankruptcy and Back tells the story of the city's fall into financial ruin and the beginning of its recovery from bankruptcy. While the headlines have been full of former mayor Kwame Kilpatrick's illegal activities and poaching of city finances, the story of the city's bankruptcy is much more complicated than that of one politician gone bad.
Author Nathan Bomey conducts detailed interviews and provides in depth background on how the city got to its place in history (with more debt than revenue including legacy debt that threatened two generations of pensioners).
At 139 square miles, Detroit is geographically larger than Manhattan, San Francisco and Boston combined.
My friends are often surprised when I say it takes 40 minutes to get anywhere in Detroit. That doesn't always mean leaving the city for the suburbs. To get from one side of the city to the other, can take that length of time. Imagine if you're the victim of a crime and awaiting law enforcement whose patrol area has been greatly expanded as the population diminishes but the size of the city hasn't changed.
It really broke my heart (which is why it took me almost two weeks to finish this book) to read how the city mismanaged its pension accounts to benefit a few.
One pensioner, for example, had contributed about $100,000 of his own money to his annuity fund. With standard investment practices, his annuity investment should have equaled about $400,000 by the time he retired. But after years of excess annuity interests, the pensioner received a lump sum of $1.4 million when he retired.
This is just one of the stories that explains how those controlling the pot manipulated things to their own advantage. The story of pensioners receiving an extra pension check (13 instead of 12) when investments performed well shocked me. That windfall should have been set aside for future pensioners and, if it had, the city would have had fewer problems funding its pensions.
What was missing from this book?
I really felt that this book would have benefited from photographs, illustrations, charts, etc. Even after seeing Kevyn Orr's photo many times in the newspaper, his is the only face I can conjure in this story that drops names like no other story I've read of late. Also, the beauty of the DIA and its amazing collection would have been well represented with some photographs. I did, however, love the line art that graced every chapter title page.
Would I recommend?
I would recommend this book to those who enjoy non-fiction and/or history. It is not for everyone but it is an important story to understand.
This book was both hard to read and an important read, particularly for me as a native Detroiter. Detroit Resurrected: To Bankruptcy and Back tells the story of the city's fall into financial ruin and the beginning of its recovery from bankruptcy. While the headlines have been full of former mayor Kwame Kilpatrick's illegal activities and poaching of city finances, the story of the city's bankruptcy is much more complicated than that of one politician gone bad.
Author Nathan Bomey conducts detailed interviews and provides in depth background on how the city got to its place in history (with more debt than revenue including legacy debt that threatened two generations of pensioners).
At 139 square miles, Detroit is geographically larger than Manhattan, San Francisco and Boston combined.
My friends are often surprised when I say it takes 40 minutes to get anywhere in Detroit. That doesn't always mean leaving the city for the suburbs. To get from one side of the city to the other, can take that length of time. Imagine if you're the victim of a crime and awaiting law enforcement whose patrol area has been greatly expanded as the population diminishes but the size of the city hasn't changed.
It really broke my heart (which is why it took me almost two weeks to finish this book) to read how the city mismanaged its pension accounts to benefit a few.
One pensioner, for example, had contributed about $100,000 of his own money to his annuity fund. With standard investment practices, his annuity investment should have equaled about $400,000 by the time he retired. But after years of excess annuity interests, the pensioner received a lump sum of $1.4 million when he retired.
This is just one of the stories that explains how those controlling the pot manipulated things to their own advantage. The story of pensioners receiving an extra pension check (13 instead of 12) when investments performed well shocked me. That windfall should have been set aside for future pensioners and, if it had, the city would have had fewer problems funding its pensions.
What was missing from this book?
I really felt that this book would have benefited from photographs, illustrations, charts, etc. Even after seeing Kevyn Orr's photo many times in the newspaper, his is the only face I can conjure in this story that drops names like no other story I've read of late. Also, the beauty of the DIA and its amazing collection would have been well represented with some photographs. I did, however, love the line art that graced every chapter title page.
Would I recommend?
I would recommend this book to those who enjoy non-fiction and/or history. It is not for everyone but it is an important story to understand.
December 10, 2017
Growing up, I've been able to watch the public side of the battle over Detroit's bankruptcy unfold on the nightly news, but this narrative is a great account of the gritty details. It marries the names and separate interests (creditors, debtors, insurers, the pensioners, politicians, and the Detroiters) of the parties involved and explains the legal basis and guidance for the proceedings based on the city's history and future directions. If you really want to understand exactly what happened and why certain decisions were made, you should read this.
However, keep in mind, while it goes through the narrative of Detroit through its bankruptcy, it does so with the logic of Rick Snyder at its helm. It heralds his brand of technocracy as "neutral" and "apolitical, and the appointment of emergency managers as financial experts that could serve to solve a city's policy problems better than its elected officials. This in it of itself raises questions about the nature of accountability and the nature of efficiency. Therefore, it does a great job of presenting a Snyder-approved version of events, whether or not that should be taken merely at face value. This was written pre-Flint Water Crisis and clearly did not foresee the troubles "the Nerd" would create for the city in the name of ruthless financial efficiency and quantitative success.
However, keep in mind, while it goes through the narrative of Detroit through its bankruptcy, it does so with the logic of Rick Snyder at its helm. It heralds his brand of technocracy as "neutral" and "apolitical, and the appointment of emergency managers as financial experts that could serve to solve a city's policy problems better than its elected officials. This in it of itself raises questions about the nature of accountability and the nature of efficiency. Therefore, it does a great job of presenting a Snyder-approved version of events, whether or not that should be taken merely at face value. This was written pre-Flint Water Crisis and clearly did not foresee the troubles "the Nerd" would create for the city in the name of ruthless financial efficiency and quantitative success.
January 9, 2024
Very interesting book-
Anyone who has an interest in how Detroit went from bankruptcy to its resurgence I’d say pick up this book written by a SE Michigan native. I love hanging out in Detroit as an adult.
Growing up 20 minutes north of Detroit and I was in college in Michigan when the bankruptcy was filed, always interesting to read books about events you were alive for. I just briefly met Kevyn Orr this Fall not realizing his big role in the Detroit bankruptcy situation which made this even more interesting.
Anyone who has an interest in how Detroit went from bankruptcy to its resurgence I’d say pick up this book written by a SE Michigan native. I love hanging out in Detroit as an adult.
Growing up 20 minutes north of Detroit and I was in college in Michigan when the bankruptcy was filed, always interesting to read books about events you were alive for. I just briefly met Kevyn Orr this Fall not realizing his big role in the Detroit bankruptcy situation which made this even more interesting.
March 30, 2025
Well written but it is very lawyer and financial driven. If that is your interest, you'll love this.
May 16, 2016
A very well-chronicled exploration of the forces that led the city of Detroit, Michigan, into insolvency and the opposing forces that helped lift it out of Chapter 9 bankruptcy less than 18 months after Governor Snyder turned the city over to an "emergency manager" - Kevyn Orr. Written by an award-winning journalist formerly of the Detroit Free Press (now at USA Today in Washington), the book helped me understand what never made sense simply by reading shorter essays in the New York Times or the Chicago Tribune. In particular, the portions about the struggle to monetize the incredible art housed at the Detroit Institute of Art (DIA) to help pay pensioners (ultimately avoided, thankfully) was particularly helpful and compelling reading. The book would have been served well by having a signature of images of the city, the DIA, Snyder, Orr, Judge Rosen and Judge Rhodes and other protagonists in this drama. But even without a single photo, the book did a good job portraying what happened in Detroit, and the work still to be done as of mid-2016, nearly two years after the city emerged from bankruptcy proceedings.
December 9, 2016
Having lived in Michigan all my life, this book was an automatic must read for me. So much of what this book contains about Detroit's bankruptcy and climb back towards solvency didn't make the everyday flow of news in the Detroit media. To read what an incredible--and unprecedented--feat this was, was amazing.
That said--I had real trouble understanding a lot of the financial details. Some parts I went back and read twice, and still struggled. This is not an area I'm fluent in, and that became apparent to me from Page 1. I didn't finish the book knowing nearly as much as I had hoped about the entire situation.
But that's on me. Bomey, who covered the entire bankruptcy saga for the Detroit Free Press, lays everything out, mostly in chronological order, and does an admirable job of picking his way through the landmines. This is an important book for anyone interested in the state of our nation's cities, especially if they live in Michigan.
That said--I had real trouble understanding a lot of the financial details. Some parts I went back and read twice, and still struggled. This is not an area I'm fluent in, and that became apparent to me from Page 1. I didn't finish the book knowing nearly as much as I had hoped about the entire situation.
But that's on me. Bomey, who covered the entire bankruptcy saga for the Detroit Free Press, lays everything out, mostly in chronological order, and does an admirable job of picking his way through the landmines. This is an important book for anyone interested in the state of our nation's cities, especially if they live in Michigan.
August 6, 2018
I’ll confess that at times it was difficult to get through some chapters of this book—especially as it covers Detroit’s bankruptcy in greater detail than any other reporting I know of. But in telling the great details this book reminds us that we need to pay attention to them. What may seem like complicated high-level administrative decisions can and and do have an immense impact on our lives, just as they did in Detroit. We as residents of a democracy owe it to our neighbors and to ourselves to pay attention to the choices our elected officials make and to advocate for what we want for our future. Detroit Resurrected isn’t just a story about Detroit, it’s a lesson for all Americans. Detroit may have fallen on the sword, but anyone who watched and didn’t take note is at risk of falling in the same direction.
June 3, 2016
I read this book because I was born in Detroit and though my parents moved to the suburbs in 1950, Detroit was an important part of my life. In addition, Nathan Bomey was a student of my son Mike Hill at Saline High School. The book can be difficult for those of us who are limited in our understanding of city finance; however, there is amazing insight into the fascinating side of Detroit's bankruptcy and the personalities who made it happen. I would recommend this to all who still love Detroit in spite of its problems.
April 7, 2022
For decades now Detroit has been America's preeminent symbol of urban decline. The crime, the poverty, the loss of 2/3s of its population. The city government was both expensive and dysfunctional. In 1962, they created a city income tax; in 1972 utility bills got extra taxes; in 1999 there were casino gambling taxes, yet by 2013 police response times were over half an hour and 40% of streetlights were nonfunctioning. Almost half of city properties didn't pay their property taxes, and the city had given up trying to collect them. In 2008 the FBI revealed that Mayor Kwame Kilpatrick had diverted at least $73 million in contracts to companies owned by his friend Bobby Ferguson, and got $1 million in bribes for people who wanted pension fund investments.
Yet Mayor Kilpatrick's most important act was the February 2005 deal to borrow $1.44 billion to cover a pension hole just slightly larger than that. To get around Michigan law confining bonded debt to 10% of a city's property value, he created two independent corporations to issue their own debt, which was guaranteed by two bond insurers, FGIC and Syncora. On the $800 million variable debt portion, they got the same two insurers to issue interest rate swaps to keep the city's rate steady, and, when the city's credit rating was downgraded in 2008, they pledged casino taxes to the corporations to shore them up. This shady deal would soon be the centerpiece of the city's bankruptcy problem.
In early 2013, Republican Governor Ric Snyder (the "tough nerd" and former CPA, as he billed himself) appointed Jones Day bankruptcy expert Kevyn Orr to be the emergency manager for Detroit, and Orr filed the city for bankruptcy on July 18, 2013, just moments before a UAW lawyer was scheduled to begin a hearing to block it. The City had almost 17,000 creditors, with $18.5 billion in debt, almost half of which was pensions and healthcare. US District Judge Gerald Rosen recommended longtime bankruptcy judge Stephen Rhodes take the case, and then Rhodes appointed Rosen the mediator between all the squabbling sides. From early only judge Rhodes claimed that the city of Detroit was "service delivery insolvent" so he focused on using funds to repair streetlights and other services, while the two bond insurers were junkyard dogs who attacked every effort to spend money on anything but creditors. Rosen, meanwhile, was the instigator of the "Grand Bargain" which got almost half a billion in foundation money, especially from Ford and Kresge, to meet with another $300 million in state money to buy off the Detroit Institute of Art before creditors got it, and to use the money to pay off most of the pension shortfall. Although the insurers fought that deal too, eventually Syncora caved with some free property and then FGIC, as the last holdout, caved too, making this a completely consensual bankruptcy (although with much arm-twisting by Rhodes) that ended in November 2014. Basic bondholders got a 25% cut, and the insurers took more like 85% on their shady deal, but, the pensioners, with the foundation money, lost only about 5% of their pension costs (the police and firefighters just lost COLA payments), although they did lose much of the city's formerly vague healthcare promises. The city got a $1.5 billion infusion to "reinvest" and new mayor Mike Duggan worked hard to restore a functioning city government.
This is an exceptionally well done and lucid telling of a complex story, which combines shoe-leather reporting and many interviews with intricate knowledge of the documents and cases. Although Detroit's bankruptcy is no longer on the front pages, it won't be long before other cities are in the same position and we have to relearn the lessons of Detroit again.
Yet Mayor Kilpatrick's most important act was the February 2005 deal to borrow $1.44 billion to cover a pension hole just slightly larger than that. To get around Michigan law confining bonded debt to 10% of a city's property value, he created two independent corporations to issue their own debt, which was guaranteed by two bond insurers, FGIC and Syncora. On the $800 million variable debt portion, they got the same two insurers to issue interest rate swaps to keep the city's rate steady, and, when the city's credit rating was downgraded in 2008, they pledged casino taxes to the corporations to shore them up. This shady deal would soon be the centerpiece of the city's bankruptcy problem.
In early 2013, Republican Governor Ric Snyder (the "tough nerd" and former CPA, as he billed himself) appointed Jones Day bankruptcy expert Kevyn Orr to be the emergency manager for Detroit, and Orr filed the city for bankruptcy on July 18, 2013, just moments before a UAW lawyer was scheduled to begin a hearing to block it. The City had almost 17,000 creditors, with $18.5 billion in debt, almost half of which was pensions and healthcare. US District Judge Gerald Rosen recommended longtime bankruptcy judge Stephen Rhodes take the case, and then Rhodes appointed Rosen the mediator between all the squabbling sides. From early only judge Rhodes claimed that the city of Detroit was "service delivery insolvent" so he focused on using funds to repair streetlights and other services, while the two bond insurers were junkyard dogs who attacked every effort to spend money on anything but creditors. Rosen, meanwhile, was the instigator of the "Grand Bargain" which got almost half a billion in foundation money, especially from Ford and Kresge, to meet with another $300 million in state money to buy off the Detroit Institute of Art before creditors got it, and to use the money to pay off most of the pension shortfall. Although the insurers fought that deal too, eventually Syncora caved with some free property and then FGIC, as the last holdout, caved too, making this a completely consensual bankruptcy (although with much arm-twisting by Rhodes) that ended in November 2014. Basic bondholders got a 25% cut, and the insurers took more like 85% on their shady deal, but, the pensioners, with the foundation money, lost only about 5% of their pension costs (the police and firefighters just lost COLA payments), although they did lose much of the city's formerly vague healthcare promises. The city got a $1.5 billion infusion to "reinvest" and new mayor Mike Duggan worked hard to restore a functioning city government.
This is an exceptionally well done and lucid telling of a complex story, which combines shoe-leather reporting and many interviews with intricate knowledge of the documents and cases. Although Detroit's bankruptcy is no longer on the front pages, it won't be long before other cities are in the same position and we have to relearn the lessons of Detroit again.
April 30, 2025
This is overall a really good read. The author is very patient with the reader on the progress of the court case - I learnt a lot about a Chapter 9 restructuring.
But my main takeaway is this: avoid municipal bonds that are likely to be distressed. Unlike corporate bonds that have ample amount of case studies on how the restructuring will go, Chapter 9 is rarely used (partially because of the expense, partially because - rightfully so - due to the political backlash). In addition, Chapter 9 dictates that municipal assets can not be liquidated. Because of it, unlike a corporate restructuring that it’s not uncommon to hear post liquidation the debtors came out whole, municipal bonds on the other hand, should Chapter 9 occur, more likely than not a haircut would occur.
Yet, as the book wonderfully demonstrated, the political backlash will also make the restructuring rather unpredictable and unpleasant. At the root of the issue is that the people who sign on to much of the local debt - the politicians - have no long term interests in the underlying performance of the debt: they’ll be long gone from the office by the time the bond matures or defaults. Thus, in order to score political points while they’re in the office, they have more political incentives than not to borrow heavily when the city is having funding issues: the constituents are not sophisticated enough to know better, and wall streets are more than happy to pump money into them.
Because the people will ultimately suffer and judges are human after all, judges have more incentives to maintain the city’s infrastructure above creditor’s rights. This means that fundamentally, a muni bond only works if it doesn’t default. The kind of muni bonds that have default tendencies (especially major cities bonds, which Warren Buffett warned about to his partners before the Berkshire days) are simply not worth holding unless significant margin of safety is acquired. The negative publicity - which the Detroit case demonstrated (the recent Puerto Rico case also demonstrated) means that the creditors will automatically be seen as the enemy of the people even if they stand strong in terms of legal terms.
But my main takeaway is this: avoid municipal bonds that are likely to be distressed. Unlike corporate bonds that have ample amount of case studies on how the restructuring will go, Chapter 9 is rarely used (partially because of the expense, partially because - rightfully so - due to the political backlash). In addition, Chapter 9 dictates that municipal assets can not be liquidated. Because of it, unlike a corporate restructuring that it’s not uncommon to hear post liquidation the debtors came out whole, municipal bonds on the other hand, should Chapter 9 occur, more likely than not a haircut would occur.
Yet, as the book wonderfully demonstrated, the political backlash will also make the restructuring rather unpredictable and unpleasant. At the root of the issue is that the people who sign on to much of the local debt - the politicians - have no long term interests in the underlying performance of the debt: they’ll be long gone from the office by the time the bond matures or defaults. Thus, in order to score political points while they’re in the office, they have more political incentives than not to borrow heavily when the city is having funding issues: the constituents are not sophisticated enough to know better, and wall streets are more than happy to pump money into them.
Because the people will ultimately suffer and judges are human after all, judges have more incentives to maintain the city’s infrastructure above creditor’s rights. This means that fundamentally, a muni bond only works if it doesn’t default. The kind of muni bonds that have default tendencies (especially major cities bonds, which Warren Buffett warned about to his partners before the Berkshire days) are simply not worth holding unless significant margin of safety is acquired. The negative publicity - which the Detroit case demonstrated (the recent Puerto Rico case also demonstrated) means that the creditors will automatically be seen as the enemy of the people even if they stand strong in terms of legal terms.
June 3, 2024
Over 6 months ago I finally read this book and boy was I not expecting this!
As someone born, raised and a long-time and current employee of Detroit, this book gave me the missing information that was needed during the time of bankruptcy and uncertainty, especially as an employee. Most of the information in this book was not available for employees at the time, so this book provides us the view we needed to see how we as a city found ourselves in the financial destitution we were in. Not to mention the entire world was watching and many people were absolutely "banking" on the downfall of the city as a whole.
I finally found peace in having a full understanding of the hard decisions that needed to be made in order for my city, my employer, and the citizens as a whole to get on the other side of bankruptcy. Obviously, this book is personal to me as an employee, but even more personal as someone who wears the heart of Detroit everyday.
If you are interested in how the City of Detroit got to where it was in order to have the call for bankruptcy, READ THIS BOOK! If you want to know exactly when the decision was made for the bankruptcy, then READ THIS BOOK! I promise you, I was not at all prepared for Kevin Orr to make the decision to file for the largest municipal bankruptcy in history just because he took a drive in a park!
As someone born, raised and a long-time and current employee of Detroit, this book gave me the missing information that was needed during the time of bankruptcy and uncertainty, especially as an employee. Most of the information in this book was not available for employees at the time, so this book provides us the view we needed to see how we as a city found ourselves in the financial destitution we were in. Not to mention the entire world was watching and many people were absolutely "banking" on the downfall of the city as a whole.
I finally found peace in having a full understanding of the hard decisions that needed to be made in order for my city, my employer, and the citizens as a whole to get on the other side of bankruptcy. Obviously, this book is personal to me as an employee, but even more personal as someone who wears the heart of Detroit everyday.
If you are interested in how the City of Detroit got to where it was in order to have the call for bankruptcy, READ THIS BOOK! If you want to know exactly when the decision was made for the bankruptcy, then READ THIS BOOK! I promise you, I was not at all prepared for Kevin Orr to make the decision to file for the largest municipal bankruptcy in history just because he took a drive in a park!
December 4, 2018
The name is somewhat misleading. It's not really about the full recovery in progress in Detroit, but about the 21 month long chapter 9 bankruptcy.
That's not really a bad thing: It's a fascinating story about how to screw up a city and its inhabitants and how Detroit tried to fix it. Michigan Governor Rick Snyder appointed corporate lawyer Kevyn Orr as an emergency manager who started the bankruptcy process. The book covers what happened next.
The author takes a general neutral tone, though lets some bias slip in telling moments.
The biggest takeaway I got from the book was the information about how the size of Detroit related to how expensive it is to run the city when less than half the people who lived there in their 1950s peak. And maybe the most interesting thing about the story itself was the judge who was mediating the bankruptcy went around to various philanthropic foundations and the state to raise $800 million to save the Detroit Institute of Arts' collection while reducing the harm done to pensioners by the bankruptcy.
Overall, a fine read. Worthy of a John Gresham novel. I would have liked to see more about how the recovery continued after the end of the bankruptcy but only coming out in 2016 there probably wasn't much around for Nathan Bomey to write about.
That's not really a bad thing: It's a fascinating story about how to screw up a city and its inhabitants and how Detroit tried to fix it. Michigan Governor Rick Snyder appointed corporate lawyer Kevyn Orr as an emergency manager who started the bankruptcy process. The book covers what happened next.
The author takes a general neutral tone, though lets some bias slip in telling moments.
The biggest takeaway I got from the book was the information about how the size of Detroit related to how expensive it is to run the city when less than half the people who lived there in their 1950s peak. And maybe the most interesting thing about the story itself was the judge who was mediating the bankruptcy went around to various philanthropic foundations and the state to raise $800 million to save the Detroit Institute of Arts' collection while reducing the harm done to pensioners by the bankruptcy.
Overall, a fine read. Worthy of a John Gresham novel. I would have liked to see more about how the recovery continued after the end of the bankruptcy but only coming out in 2016 there probably wasn't much around for Nathan Bomey to write about.
July 18, 2020
Strongly advise new residents of Detroit, MI with limited knowledge of the city's history and have a personal interest in civic work to read this documentary on how the city got itself into the tragic journey of bankruptcy and how it meandered out of it. May be a tough read for those without a finance background, but if you do, it will be a quick informative read. It is interesting to see some of the same players from that journey active in politics today along with hints of some of the same negative behaviors that got them into this peril. Detroit needs more than new voices, it needs a paradigm shift in thinking and values to uproot the curse of mismanagement, financial instability and inept leadership. The school system, public transportation, decrepit neighborhoods will not turn the corner until leadership values the constituents they serve. The gimmicky mayor in office now is pulling the rug over those on those on the margins, pandering for their votes as if he really cares. The scruffy suits and gruff demeanor is an act, a spirit of professionalism and excellence is sorely needed for change to happen in Detroit.
August 21, 2022
3.8 stars. Wow I learned so much from this book. It starts by discussing the history that lead the city to no more options than to declare bankruptcy. Then all of the moving parts involved in getting a restructuring plan passed. As someone who has been to the DIA and loves spending an afternoon wandering around it, it’s hard to imagine that the city would no longer have it. But when it comes down to paying retirees or keeping art, obviously the art could go. I appreciate how hard people fought to keep it but it seemed to me that the people were kind-of missing the point.
I think the real people who lost in this situation were the residents of Detroit. As someone who moved to the area 5 years after the bankruptcy I would like to say that the city has gotten better however I did not often venture out past the safe well populated bubbles. I think most new Detroiters should read or listen to this book just to see how far the city and come and to appreciate those who tried to save it and those who suffered through the hard years.
I think the real people who lost in this situation were the residents of Detroit. As someone who moved to the area 5 years after the bankruptcy I would like to say that the city has gotten better however I did not often venture out past the safe well populated bubbles. I think most new Detroiters should read or listen to this book just to see how far the city and come and to appreciate those who tried to save it and those who suffered through the hard years.
December 31, 2018
Fascinating, thorough, a readable narrative and coherent analysis of an incredibly complex chapter in Detroit’s history: when the city filed for Chapter 9 bankruptcy in 2013, and the next year-plus when a vast array of lawyers, politicians, city employees and retirees, emergency managers, budget analysts, museum professionals, philanthropists, foundations, civic leaders, and many others pushed and pulled and fought their way to a grand bargain that reduced the city’s debt load (mostly around unfunded pension obligations) and bolstered city spending on core services like Police, Fire, communications, and transportation.
January 25, 2021
A comprehensive overview and detailed analysis of the circumstances and conditions that led to the fall of one of the most important American cities in history. Essential services in severe disrepair, debt obligations worsening, and decades of severe mismanagement almost took the motor city down. Keyvn Orr is appointed emergency manager and, thru a complicated series of negotiations, is able to help cobble together a restructuring that appears to have brought the city into more sound financial footing. Also recommend Fear City about the NYC fiscal crisis of the 1970s.
April 20, 2022
It's definitely not easy to write an at-all readable account of bankruptcy (even one as high-stakes and concrete as Detroit's). Bomey mostly pulled it off, which I think is impressive. It probably could have used a little more contextualization outside the walls of bankruptcy court -- more on how Detroit got there, its relationship with state and suburbs, other municipal distress at the same time, other shrinking cities' approach to service delivery -- but for its ambitions it seemed mostly successful.
October 5, 2022
I really knew nothing about Detroit’s bankruptcy before reading this. The book explained a complicated problem with emphasis on years of mishandling rather then placing the blame on one corrupt politician. Clearly the city was heading there.
The resolution and how it happened is well explained and interesting. A compelling tale with many players who all needed to compromise to find a solution which is kind of refreshing.
The resolution and how it happened is well explained and interesting. A compelling tale with many players who all needed to compromise to find a solution which is kind of refreshing.
October 27, 2016
You have a kind of be a political/legal junkie to absorb all the information in this book. I thought there was going to be more about the "comeback" based on the title, but it tells the full story of the bankruptcy and the all the legal and community battles it entailed. I loved it, but it's not a light read.
January 1, 2019
More than I ever wanted to know about the Detroit bankruptcy. I can't fault the author -- really, he did everything anyone could do to make this subject interesting and he succeeded. It was just more than I wanted to know about the details of the bankruptcy. I was more interested in some of the details of how Detroit has fought its way back.
August 13, 2019
This was a very interesting account of the Detroit bankruptcy and how the plan of adjustment was mediated. There were so many parties to the bankruptcy and at times it was confusing to follow, but the book highlights the main players and demonstrates their commitment to turn the city around by thinking outside the box and putting the residents and their needs first.
November 9, 2017
I lived through this in Detroit, but this was a great (and Fair!) in depth explanation of why Detroit needed to file bankruptcy and how they got through it, stuff I didn't follow closely enough at the time.
May 20, 2018
I feel informed, and also the recipient of some minor pro-Snyder/pro-EFM propaganda. But information was my goal, and the telling of Detroit's bankruptcy from the perspective of the folks making many of the decisions related to it, feels pretty fair if not completely balanced.
August 11, 2019
Having read this 5 years after the conclusion of the bankruptcy, it’s interesting to see how some of the decisions have played out. Nathan’s brief descriptions of the many players and complex factors made for an interesting and quick read.
October 28, 2019
This book is very detailed about all the events and people involved in Detroit's bankruptcy and "resurrection". Amazing story of how the city went from so low to where it is today. I love downtown Detroit and I am thankful for the people that have worked so hard to put this city back on it's feet.
February 17, 2020
I found the details in this book very interesting as somebody who lived through this bankruptcy in the metro Detroit area. I am not sure if a reader without that close connection would find it as interesting. A lot of little specific details.
September 29, 2017
Great book!
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