Detroit insolvent prior to Chapter 9 filing

Detroit insolvent prior to Chapter 9 filing

A new report finds that Detroit was not just broke but actually insolvent weeks before the city filed for bankruptcy last summer.

Here’s what WDET’s Quinn Klinefelter reports:

For many years Detroit officials were known for delaying the release of the city’s Comprehensive Annual Financial Report – an audit of just how well it kept to its projected fiscal budget. State officials often complained Detroit was late in submitting the report.  Now the city is releasing its latest financial audit – covering the fiscal year that ended June 30, 2013.

It reveals that at that time, Detroit was insolvent – with a general fund deficit of $130 million dollars and not enough assets, investments or cash on hand to pay its bills.

In fact the report finds that the city defaulted on several of its obligations to creditors. The inference from the report is that Detroit was SO broke officials had little choice but to file for bankruptcy. The report is being released only weeks before a trial begins over the city’s plan to exit Chapter Nine.