Detroit to get crucial ruling in bankruptcy case

This Sept. 19, 2013, file photo, shows the city of Detroit from midtown. AP

DETROIT, Michigan—Detroit’s bankruptcy case is entering its most important stage so far as a judge decides whether the city is eligible to stay in court and fix billions in debt.

Judge Steven Rhodes promises to announce his decision Tuesday (Michigan time). If Detroit is declared eligible, it means the city can work on a plan to pay off creditors and emerge from bankruptcy with a clean balance sheet.

But if not eligible, Detroit probably would be forced to negotiate again with creditors, especially unions and pension funds. The city says it tried “good-faith” negotiations, a key condition under federal law, but couldn’t reach deals. Unions and pension funds say the talks weren’t meaningful.

With $18 billion in debt, Detroit’s bankruptcy is the largest filing by a local government in United States history.

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