Detroit bankruptcy woes - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

Detroit bankruptcy woes

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A federal judge is expected to rule Tuesday on whether Detroit is eligible for bankruptcy protection, a crucial step in the city's effort to pay off part of its overwhelming debt and to begin rebuilding its dwindling city services.

The decision is also a significant legal test for Detroit, which in July became the largest American city ever to seek bankruptcy protection. If Detroit is ruled eligible to reorganize under court protection, lawyers for the city and its appointed emergency manager may move ahead in submitting a plan to pay off part of its debts and to start reinvesting in essential services.

City officials have said such a plan could be filed before the end of the year, and that the city might emerge from bankruptcy in 2014. Whatever the judge rules, the legal battles will be far from over. Any decision is likely to bring a number of appeals.

If Detroit is found ineligible for bankruptcy protection, the city, which has already begun defaulting on some debt, is also likely to find a flood of demands and lawsuits from its creditors.