Detroit's bankruptcy battle begins

image copyrightAP
image captionDetroit's bankruptcy proceedings have been met with protests in the past, including by those opposed to cutting worker pensions

A hearing to convince a judge to approve Detroit's plan to restructure the city's debts has begun.

The trial comes 13 months after Detroit became the largest US city to file for bankruptcy in July 2013.

The plan includes cuts to pensions and creditors to drive down the $18bn (£10.8bn) debt, to what a spokesman for the city says would be a "more manageable" level.

Funds would also be devoted to demolishing abandoned city properties.

Most creditors, including more than 30,000 retirees and city employees, have already endorsed the plan of adjustment put together by state-appointed manager Kevyn Orr and his restructuring team.

However, bond insurers including New York-based Syncora Guarantee have opposed the plan, claiming Detroit has unfairly discriminated against financial creditors.

"It has been a very fast-track bankruptcy, which Syncora has no issue with. Syncora's issue is the lack of transparency of the process and the unfair treatment of its claims," company lawyer James Sprayregen said.

An estimated $12bn of the city's $18bn debt is said to be unsecured, with no taxes or other revenue streams to pay it down.

Detroit has seen a dramatic decline in economic activity and population, as the big carmakers - once the city's main source of employment - shifted production to cheaper locations in the US and overseas.

The city is now home to about 700,000 residents, down from a peak of 1.8 million in 1950.

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