Kevyn Orr said Detroit was on the "brink of financial and operational ruin"
Detroit will immediately stop debt payments, the city's financial manager has announced, as he set out a proposal to creditors that would see them take a drastic cut on the money they are owed.
Kevyn Orr announced a moratorium on all Detroit's payments on unsecured debt.
That money will instead be used to keep the city operating, and $1.25bn (£800m) will be reinvested in public services over the next decade, he said.
Creditors were asked to accept 10 cents on the dollar of what they are due.
Last month Mr Orr said Detroit had debt obligations of "at least" $15bn, though reports have suggested the actual figure could be closer to $20bn.
Other measures in Mr Orr's proposed plan include spinning off Detroit's Water and Sewerage Department to be run by an independent authority, and reducing city-provided healthcare for retirees.
'Recovery begins today'Bankruptcy lawyer Mr Orr was appointed in March as Detroit's emergency manager to take over the city's finances and tasked with turning around what was described as a "crisis" situation.
On Friday morning he met as many as 150 people representing banks, insurers and companies holding Detroit debt, and laid out his detailed proposal.
"Detroit's recovery begins today," he said. "Financial mismanagement, a shrinking population, a dwindling tax base and other factors over the past 45 years have brought Detroit to the brink of financial and operational ruin."
Mr Orr has previously said there is a 50-50 chance of Detroit filing for bankruptcy, though he hopes to avoid that scenario.
Source: BBC News - Business http://www.bbc.co.uk/news/business-22914431#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
