CHICAGO — Detroit's historic bankruptcy is ending.
The largest municipal bankruptcy in the history of the U.S. will officially be over at 12:01 AM on Dec. 11. The city will begin disbursing payments to bond insurers and other creditors as part of the settlement of $12 billion of debt.
The formal exit ends a saga that began in March 2013 when Michigan Gov. Rick Snyder declared the city to be in a state of fiscal emergency and brought in corporate bankruptcy attorney Kevyn Orr to manage the restructuring.
"We're going to start fresh tomorrow and do the best we can to deliver the kind of services people expect," Mayor Mike Duggan said at a press conference Wednesday with Orr and Snyder.
Orr will step down from his position today and hand over all control to Duggan and the City Council.
At Wednesday's press conference the trio said Detroit's Chapter 9 was a case study in the importance of partnerships and the effectiveness of municipal bankruptcy as a last-resort option.
"This was truly unique and no one should draw precedents from this in terms of other Michigan municipalities," Snyder said at the press conference. "Don't plan on bankruptcy as part of your planning process ... but in this case we had a unique outcome that's very positive."
As part of the formal exit, the city's court-approved plan of adjustment will take effect immediately. The plan sheds $7 billion of the city's long-term debt - the bulk of it from retiree health care benefits - and outlines $1.7 billion of new revenue that will be reinvested back into city services. U.S. Bankruptcy Judge Steven Rhodes approved the plan last month.
Duggan said the end of bankruptcy means the end of time-draining legal work, but warned that the task of improving the city remains tough.
"We've got to rebuild a water department, a bus department, computers, a financial system," Duggan said.
"If the city hits all the budget targets and we successfully raise revenues in multiple areas over 10 years, there will be $1.7 billion in new services," said the mayor. "It's a framework that says we'll be able to provide services that people in a city our size expect."
Orr, who oversaw Detroit during its most turbulent period, said he felt bittersweet about his departure, and that he'd grown fond of the city and its residents. "We've been working toward this point so this is a culmination," Orr said. "The city is moving forward and that gives me a great deal of pride and satisfaction."
He said officials will spend the next day or two filing final documents, including transferring payments to creditors. The city will also close a $275 million exit financing with Barclays and issue $280 million of bonds to help pay off creditors.
Court-ordered mediation over the attorney fees racked up over the course of the case continues, according to Orr.
In downplaying the bankruptcy option, Snyder said the emergency manager process is working in other cities that are now or have been under state control.
"We've exited Benton Harbor and Pontiac successfully, and we're talking about exiting Flint in the next few months," Snyder said. "So we're seeing success through the whole emergency manager process and having people working together."
Snyder also said that he thinks the state has controlled the troubled Detroit Public Schools system for too long -- it's been under an emergency manager for six years -- and that officials need to figure out how to improve the city's schools as part of its overall recovery.
"In my view, we've been there too long," Snyder said of DPS. "This is a case where emergency managers have not been as effective as they have been in municipalities."