City of Detroit’s historic bankruptcy case is closed, ending 13.5 years of court supervision

• The Sheffield Administration recently began making final payments to unsecured creditors, leaving no further role necessary for Bankruptcy court and
  clearing path to end court oversight
• After allowing approximately two weeks for any objections to be filed, Bankruptcy judge ruled swiftly to end court's nearly 13 years of oversight that began in July 2013
• Mayor Mary Sheffield lauds City's financial team and department heads for strong management that has produced 12 consecutive balanced budgets and surpluses and a return to Investment Grade status
  

The City of Detroit's historic bankruptcy case is now closed. U.S. Bankruptcy Court Judge Thomas Tucker Tuesday afternoon granted the City's motion requesting a Final Decree closing the Chapter 9 bankruptcy case, effectively ending the court's supervision over Detroit. The closure marks the end of a transformative journey that began in July 2013 when Detroit, under a state-appointed Emergency Manager, filed for bankruptcy.

"I want to thank our financial and legal teams for their hard work making this day possible. Detroit continues to show that it has its financial house in order and in fact has become a model city for effective and responsible fiscal management," Mayor Sheffield said, citing the City's 12 consecutive balanced budgets and surpluses, reserve funds totaling more than $500 million and a return to investment grade status among creditors.

"I would be remiss if I didn't acknowledge the critical role the sacrifices of our retirees played in the City's ability to emerge from bankruptcy and embark upon the road to recover. We owe them a great debt of gratitude," Mayor Sheffield added.

The action was made possible after the City began a final distribution of about $10 million to claimants, which represents accrued interest on Class 14 B notes, the financial recovery bonds given to unsecured creditors, who were among the last to get repaid at least a portion of what they were owed. In all, the bankruptcy process allowed the city to shed approximately $7 billion in debt and to restructure another $3 billion in debt, freeing up about $150 million per year to spend on city services.

The case closing signals that the City is successfully implementing the terms of its Plan of Adjustment (POA), managing its post-bankruptcy obligations, including the resumption of legacy pension payments and has established a sustainable path for long-term fiscal stability. Fiscal Year 2027 will be the fourth year Detroit has made its pension contribution supplemented by the Grand Bargain and the City's Retiree Protection Fund.

Chief Financial Officer Tanya Stoudemire notes: "The closure represents the last step in a journey that has required discipline and sacrifice. We are signaling to the world that Detroit is once again a self-sustaining city with the financial maturity to manage its own future. Our team remains focused on the rigorous, long-term fiscal management necessary to protect our retirees and ensure our residents never face this kind of financial uncertainty again."

Since exiting active bankruptcy oversight in 2014, Detroit has achieved multiple consecutive balanced budgets and surpluses along with significant credit rating upgrades, proving its ability to maintain financial health while delivering essential services to Detroiters.

City of Detroit Bankruptcy Case | Timeline of Key Events

July 2013: Under a state-appointed Emergency Manager, the City of Detroit files for Chapter 9 municipal bankruptcy.

December 2013: A Federal judge rules that Detroit was eligible for bankruptcy.

November 2014: The court confirms the City's Plan of Adjustment, (POA) a legal roadmap for financial recovery, that includes a ten-year pause on pension contributions. The POA was built around the Grand Bargain, a unique $816 million multi-party agreement that was the centerpiece of Detroit's exit from bankruptcy meant to shore up pension funds. The contributing parties include the state, various foundations, the DIA and private corporations like Ford and GM.

December 2014: Detroit's Plan of Adjustment takes effect.

December 2014: The Detroit Financial Review Commission begins its oversight of City of Detroit finances.

FY2017: The Mayor and City Council create the Retiree Protection Fund by ordinance as a long-term strategy for legacy pension funding.

April 2018: The Detroit Financial Review Commission (FRC) ends active oversight (effective FY2019) after the City achieved 3 consecutive years of audited balanced budgets. Hereafter, Detroit has requested and received annual waivers to continue without active FRC oversight. If granted, the next waiver would be Detroit's 9^th consecutive.

FY2024: Detroit resumes making its contributions to legacy pension plans (using a blend of funding sources, RPF, Grand Bargain contributions and General Fund).

FY2025: Detroit Mayor and City Council agree to use $10 million of prior year surplus funds to issue 1^st 13^th Check to legacy pensioners impacted by bankruptcy.

June 2025: City begins distribution of B Notes to "Allowed Class 14 Claimants" (creditors)

FY2026: Detroit Mayor and City Council agree to use $10 million of prior year surplus funds to issue 2^ND 13^th Check to legacy pensioners impacted by bankruptcy.

FY2027: Detroit Mayor and City Council agree to use $10 million of prior year surplus funds to issue 3^RD 13^th Check to legacy pensioners impacted by bankruptcy.

April 2026: Detroit distributes accrued interest on B Notes to Class 14 creditors. This payment does not come from the General Fund. Instead, it comes from an escrow account which was set-up when the City's POA went into effect in December 2014 to collect and hold interest payments generated by the B Notes.

April 15, 2026: Detroit files a motion with bankruptcy court requesting the entry of a Final Decree.

May 19, 2026: U.S. Bankruptcy Court Judge Thomas Tucker grants the City's motion requesting a Final Decree effectively closing Detroit's Chapter 9 bankruptcy case ending the court's supervision over the City.