Shikha Dalmia on Detroit's Inevitable Bankruptcy


Michigan Governor Rick Snyder has postponed his decision to appoint an emergency manager to deal with Detroit's fiscal crisis. He was expected to act after a state audit last month found that the city's long-term debt was $12 billion, $2 billion more than previously reported. But the delay won't postpone Detroit's inevitable date with insolvency.

The main issue that Snyder, a Republican, will ultimately have to confront is whether to put Detroit through a managed bankruptcy, which would be legally less nettlesome but require his maximal involvement, or a conventional Chapter 9 court process that will be legally arduous but would minimize his role. Shikha Dalmia explains why Snyder should opt for the latter.