... Detroit filed for Chapter 9 bankruptcy. I blogged about the case nearly interminable (go here for one of the last) and wrote an article about it, Who Bears the Burden? The Place of Municipal Residents in Chapter 9 (download here or here).
All seems to be going reasonably well in Motown nowadays which is due in part to the successful adjustment of its debts in Chapter 9. A formal, legal mechanism by which debts can be adjusted (or reorganized, in the case of Chapter 11) is crucial for entities in a market economy. The whole of an enterprise is often worth more than its parts but the value of that whole cannot be realized without a means of forcing holdouts to participate and binding each for the sake of all.
All seems to be going reasonably well in Motown nowadays which is due in part to the successful adjustment of its debts in Chapter 9. A formal, legal mechanism by which debts can be adjusted (or reorganized, in the case of Chapter 11) is crucial for entities in a market economy. The whole of an enterprise is often worth more than its parts but the value of that whole cannot be realized without a means of forcing holdouts to participate and binding each for the sake of all.
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