Teetering on the Edge of Bankruptcy, Detroit Defaults on Some Debt

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Detroit defaulted on some debt on Friday and proposed that creditors take a drastic cut in the money they are owed by the "insolvent" city in order to avoid the largest municipal bankruptcy filing in U.S. history.

In a meeting with creditors, Detroit Emergency Manager Kevyn Orr announced a moratorium on principal and interest payments on the city's unsecured debt, and for the first time presented a detailed proposal calling on the holders of nearly $17 billion in Detroit debt to make substantial concessions.

Under his proposal, Orr said unsecured debt holders would be paid less than 10 cents on the dollar, but some creditors would get a bit more based on city revenue.