Detroit Regional Chamber > Chamber > Baruah: Reflecting on the 10 Years Since Detroit’s Bankruptcy

Baruah: Reflecting on the 10 Years Since Detroit’s Bankruptcy

July 17, 2023 sandy baruah

Sandy K. Baruah | President and Chief Executive Officer, Detroit Regional Chamber

As we reach the 10th anniversary of the historic Detroit municipal bankruptcy, it is an appropriate time to reflect on how far the city, Region, and state have come in the intervening decade.

First, it is critical to acknowledge what bankruptcy was – and wasn’t. As complicated and painful as bankruptcy was, it was not a magic wand that swept away the City’s ills. It did one thing only: restructure the City’s debt to allow just enough working capital that provided an opportunity – if used smartly – to start to turn the ship after 40-plus years of decline. Bankruptcy itself could not do things like attract new businesses and people, improve city services, restore public spaces, or improve public safety.

Yes, there is no doubt Detroit (and frankly the Region and state) are better off and on a more positive trajectory since bankruptcy, but bankruptcy was simply a new starting point. All the tremendous things that have happened since that have made Detroit America’s “comeback city” are thanks to the initiative and innovation of community groups and nonprofits, civic engagement and investment by the business community, the work of philanthropy and the City Council, and most importantly, the leadership of Mayor Mike Duggan.

Sandy Baruah headshotTo better understand the limitations of the decade-old municipal bankruptcy, let’s consider the analogy of a household that has accumulated an unsustainable level of debt. A long-lost uncle’s will provides the family money to pay off a large portion of that overwhelming debt. What the family does next will determine if this is a pivotal moment or not. If the family selects to continue with the practices that got them into debt in the first place, the unexpected largess from that long-lost uncle will prove to be fleeting, and the family will soon find itself in the same situation. Conversely, if the family uses this opportunity to make smart decisions (e.g., invest in long-term household infrastructure to minimize ongoing maintenance, use newly freed cash flow to invest in higher education for family members…) the family can turn the resetting of their debt into a pivotal and positive experience.

In both the example of the fictitious family and the real situation for Detroit, it is the decisions, actions, and priorities after bankruptcy that determine if bankruptcy was a game changer or not.

Fortunately, Detroit has made smart decisions post-bankruptcy, and we can look at those events of a decade ago and see the tremendous good that came from them.

The municipal bankruptcy was critical. It provided the much-needed new launch pad for Detroit’s last decade of success. We owe leaders like then-Governor Rick Snyder and Emergency Manager Kevyn Orr tremendous gratitude. But it is the leadership of Mike Duggan, who took office in the waning days of bankruptcy that used the opportunity bankruptcy presented to create success when certainly none was guaranteed. For this, we should all be exceptionally thankful – and consistently vigilant that today’s success does not guarantee tomorrow’s.