There is new king of the largest Municipal bankruptcy filers. Today, the City of Detroit, Michigan filed for Chapter 9 bankruptcy. Chapter 9 bankruptcy is a special kind of bankruptcy reserved for counties and municipalities.

A shrinking tax base (less income), large pension payments (large expense) and a general decline in the auto business made this bankruptcy almost inevitable. Detroit’s other option would be to just default on their obligations. At least the bankruptcy will provide an orderly process to distribute any funds to creditors.